Completed home sales jumped 7% year-over-year in July, the strongest gain so far in 2026, but the housing market’s peak may already be in the rearview mirror, according to new data showing pending home sales and new listings plunging as mortgage rates climbed to their highest level of the year.
The July sales surge reflects contracts signed in June, when mortgage rates were hovering in the 6.5% range. However, pending home sales—a leading indicator of future closings—fell 2.3% month-over-month and 2.2% year-over-year in July, marking the lowest level since January 2026, the National Association of Realtors reported on August 18.
Newly pending listings fell 7.7% from June as mortgage rates climbed to 6.69%, according to Zillow’s July Market Report. Zillow Chief Economist Mischa Fisher warned that “July was a strong month for existing home sales, but unfortunately it may represent the peak of what we can expect for the rest of the year.” The weak growth in newly pending sales and the worsening rate environment point to flat to declining transaction volumes for the remainder of 2026 in some regions.
All four U.S. regions posted monthly declines in pending sales in July. The West saw the sharpest pullback, with pending sales falling 4.7% month-over-month and 7.1% year-over-year, while the South dropped 2.2% month-over-month and 3% year-over-year. The Northeast fell 2% month-over-month, with a slight 0.2% year-over-year decline, and the Midwest posted a 0.7% decrease from June but rose 1.7% compared to last year.
NAR Chief Economist Lawrence Yun attributed the decline to elevated mortgage rates and a lukewarm job market. “The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” Yun said. “Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago.” Yun noted that pending contracts are now 30% below their pre-pandemic 2019 level, despite payroll employment running 5% above that benchmark—a gap he views as pent-up demand that could materialize if mortgage rates stabilize or decline and inventory continues to grow.
The 30-year mortgage rate climbed to 6.69%, higher than it was a year earlier. That marked the first time in 44 weeks that the current rate exceeded the prior-year level, according to Danielle Hale, chief economist at Realtor.com. The rate volatility is making it harder for homebuyers to plan, especially as rates sit near the upper end of the range seen over the past year.
Mortgage applications have fallen in lockstep with the rate increases. Overall applications dropped 2.9% week-over-week during the last week of July, with both refinance and purchase loan applications declining and running behind last year’s pace, according to the Mortgage Bankers Association. Mike Fratantoni, the MBA’s senior vice president and chief economist, noted that higher mortgage rates have weakened overall demand.
Despite the slowdown in new contracts, inventory is expected to expand as the summer slump reduces buyer activity. Zillow estimated that active inventory was 1.5% higher in July than a year earlier, with new listings up 3.1% year-over-year. This marks the continuation of a 32-month streak of annual inventory gains. Compass Chief Economist Mike Simonsen noted that inventory growth could reach the inventory-starved Northeast, which would be a positive sign for would-be buyers returning from summer vacations.
In response to the slowdown, housing prices grew 2.1% year-over-year in 2026, the slowest pace in a decade, as sellers began adjusting expectations. In July, median list prices fell 2.4% year-over-year, and price per square foot declined in 34 of the top 50 metros. However, closed sale prices continue to sit at record highs, creating a gap between what sellers hope to receive and what buyers are willing to pay in the current rate environment.
Sources
- National Association of Realtors — pending home sales data for July 2026, regional breakdowns, and commentary from Chief Economist Lawrence Yun
- Zillow — July 2026 Market Report with completed home sales figures, newly pending listings data, and Chief Economist Mischa Fisher’s analysis
- Real Estate News — mortgage rate trends, economist commentary on market peak, and inventory outlook
- Realtor.com — pending home sales trends and Chief Economist Danielle Hale’s analysis of mortgage rate volatility
- Mortgage Bankers Association — weekly mortgage application data and Chief Economist Mike Fratantoni’s commentary
- Compass — inventory outlook analysis from Chief Economist Mike Simonsen
