Pending home sales fall for seventh straight month in July

Potential homebuyers exit an open house in Redondo Beach, California.

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Home prices are still rising at a fast pace. They were up over 6 percent in June, according to the latest report from S&P Case-Shiller. The pace, however, is moderating very slightly. Prices usually lag sales, and sales have been slowing all year. Affordability is being further weakened by higher mortgage interest rates. The average rate on the popular 30-year fixed mortgage is about a half a percentage point higher now than it was at the start of this year.

Regionally, pending home sales in the Northeast rose 1.0 percent for the month but were 2.3 percent lower compared with a year ago. In the Midwest, sales were up 0.3 percent monthly but 1.5 percent lower annually. In the South, sales declined 1.7 percent monthly and 0.9 percent annually. In the West, sales fell 0.9 percent monthly and 5.8 percent annually.

Sales are weakest in the West because that is where affordability is worst. Homebuilders are most active in both the South and West, but mostly not at the lower end of the market, where demand is strongest.

Some major markets in the West, including Denver and Seattle, which have been incredibly hot and competitive, are starting to see more supply come on the market. That could cool prices slightly, and bring more buyers back.

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