In July, home contract signings fell to their lowest point in over twenty years as high mortgage rates and limited housing supply continued to weigh on potential buyers, leading many to feel discouraged.

The Pending Home Sales Index from the National Association of Realtors (NAR), which measures contract signings, dropped by 5.5% last month compared to June, and all four regions of the country experienced declines. Only the Northeast saw an uptick compared to July 2023. This index is now at its lowest level since NAR started tracking such data in 2001.

The housing market has largely stagnated in recent years due to rising mortgage rates. In July, the average rate for a 30-year fixed mortgage was approximately 6.84%, as reported by Freddie Mac.

According to real estate brokerage Redfin, a significant 86% of American homeowners hold mortgage rates below 6%, making it challenging for many to sell their homes unless absolutely necessary—a situation commonly referred to as “rate lock-in.”

In the meantime, homes sold in July registered a median price of $422,600, marking one of the highest figures recorded, as stated by NAR earlier this month.

Real estate agent Stephen Freudenberg from Atlanta remarked that the housing market has become so challenging that many clients have given up on purchasing homes. “They’re pretty worn out,” he informed YSL News. “People are just tired of this enduring seller’s market.”

The sluggish sales pace in July led to a slight increase in housing supply—the ratio of available homes for sale to the number sold—rising to its highest level since the start of the pandemic in May 2020.

Many analysts are hopeful for a drop in mortgage rates, following anticipated interest rate cuts by the Federal Reserve in September.

NAR’s chief economist, Lawrence Yun, expressed this optimism in a statement, saying, “Current lower, falling mortgage rates will undoubtedly attract buyers back into the market.”

On Thursday, Freddie Mac reported that the average rate for a 30-year fixed mortgage dropped to 6.35% for the week ending August 29, the lowest it has been in nearly a year and a half.