Here’s why the housing market is hurting so much this summer
Two different data regarding the housing market published on Thursday point to the same problem; The problem seems to be getting worse. Housing is too expensive to own and build.
Pending home sales in June, a measure of signed contracts on existing homes, fell 5.4% from May, according to the National Association of Realtors. Sales fell 0.3% from June 2025, well below analysts’ expectations.
This reading is based on people going home shopping in June and deciding to sign a deal, so it’s the most up-to-date measure of the state of the market.
“The highest mortgage rates in almost a year and a record national average home price are contributing to a stagnant housing market that is particularly difficult for first-time homebuyers,” NAR Chief Economist Lawrence Yun said in a statement. he said.
Mortgage rates jumped in a narrow but higher range in June, according to Mortgage News Daily; The average rate on the popular 30-year fixed mortgage started the month at 6.6% and ended at the exact same rate. This rate dropped to 5.99 percent at the end of February, one day before the start of the Iran war.
Mortgage demand from home buyers weakened last month. Last week, mortgage applications to buy a home were 2% lower than the same week the previous year, even though mortgage rates were slightly higher last year.
Meanwhile, confidence among the nation’s single-family builders fell in July, according to another report released Thursday from the National Association of Home Builders. It fell to 34 from an upwardly revised reading of 36 in June. Sentiment has remained below 40 for 15 consecutive months; This was the longest sustained increase since 2012. Anything below 50 is considered negative sentiment.
“Affordability remains a key challenge for the homebuilding industry as high mortgage rates, costly land, rising material prices and a persistent shortage of skilled labor continue to impact the market,” NAHB chief economist Robert Dietz said in a statement. he said.
A growing share of builders (37 percent) reduced prices in July, from 35 percent in June and 32 percent in May. According to NAHB, the use of sales incentives reached 63% in July, up slightly from 62% in June, marking the 16th consecutive month the rate reached 60% or higher.
Dietz said Congress’ newly enacted housing legislation, which seeks to cut through red tape and help locals expedite housing permits, “is a positive step that will help expand the housing supply and reduce overall housing costs, although more policy changes are needed at the state and local level.”
Prices of existing homes continue to rise, with medians reaching a new record in June, according to NAR. Although there are local weaknesses, the overall low housing supply puts upward pressure on prices.
“As a result, housing continues to decline in the U.S. economy and accounts for approximately 15-18% of the U.S. economy, according to NAHB,” wrote Peter Boockvar, chief investment officer at OnePoint BFG Wealth.
