High Mortgage Rates and Record Prices Weigh on Buyers
Americans pulled back sharply on signing contracts to purchase homes in June 2026 as elevated borrowing costs and record-high home prices continued to squeeze affordability, underscoring the fragile state of the U.S. housing market during the peak summer selling season.
Pending home sales, a leading indicator of future existing-home closings, fell 5.4% in June from May 2026, according to data released by the National Association of Realtors (NAR). Compared with a year earlier, contract activity edged down 0.3%, suggesting demand remains largely stagnant despite a resilient labor market.
The broad-based monthly decline extended across all four major U.S. regions, reflecting the growing financial strain facing prospective buyers after mortgage rates climbed to their highest levels in nearly a year. Combined with record-high home prices, elevated financing costs have eroded purchasing power and sidelined many households–particularly first-time buyers with limited savings and little accumulated home equity.
“The combination of higher borrowing costs and elevated home prices continues to challenge affordability across much of the country,” NAR Chief Economist Lawrence Yun said in the report. While continued job creation provides an important foundation for housing demand, Yun noted that stronger employment alone has not been sufficient to offset the affordability pressures confronting today’s buyers.
Pending home sales measure signed purchase contracts rather than completed transactions and typically lead existing-home sales by one to two months. However, not every contract reaches the closing table because financing issues, inspections, appraisal gaps and other contingencies can cause deals to fall through. As a result, pending sales serve as a directional indicator rather than a precise forecast of future closings.
Regionally, contract activity weakened on a month-over-month basis nationwide. The Midwest posted the steepest monthly decline, with pending sales falling 8.9%, followed by a 4.7% decline in the West, a 4.1% drop in the South and a 3.0% decrease in the Northeast.
The annual picture was more mixed. Pending sales increased 2.2% in the Northeast and edged 0.3% higher in the Midwest, while activity slipped 0.9% in the South and 1.1% in the West, highlighting uneven housing conditions across regional markets.
Despite the national slowdown, several metropolitan areas continued to outperform, demonstrating that local economic growth, employment trends and relative affordability remain powerful drivers of housing demand.
Among the nation’s 50 largest metropolitan areas, Virginia Beach, Virginia, recorded the strongest annual increase in pending home sales, rising 15.4% from a year earlier. Sacramento followed with a 15.2% gain, while Kansas City climbed 14.4% and Richmond advanced 14.0%. Buffalo rounded out the top five with a 12.1% increase.
Several major Sun Belt and coastal markets also posted notable gains. Austin rose 11.1%, San Francisco increased 10.7%, Los Angeles advanced 9.6%, Miami climbed 9.5%, and St. Louis posted a 9.1% annual increase in contract activity.
The June figures reinforce a housing market caught between resilient underlying demand and persistent affordability constraints. While steady employment and demographic demand continue to support buyer interest, elevated mortgage rates and historically high home prices remain significant obstacles to a broader recovery. Unless financing costs ease or housing affordability improves through slower price appreciation or increased inventory, home sales are likely to remain subdued in the months ahead.
English