Nationally, pending sales dropped to the lowest level on record in July 2024… but pent-up buyer demand could be waiting for opportunities to open up. The National Association of REALTORS®’ newly released Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—dropped 5.5% in July and was down 8.5% compared to a year earlier.
In the Twin Cities pending sales dropped 4.2% year-over-year in July, lower than the national average. Closed sales also didn’t rise as they usually do. Twin Cities closed sales increased as expected every month from January to May… but stalled in June and July.
There are many different reasons why buyers “wait and see”, but affordability challenges due to rising prices because of competition due to low inventory likely plays an important role. Inventory is rising, however, and has increased over last year every month in 2024.
Some buyers may now be waiting for interest rates to drop as more than one Fed interest rate drop is likely this fall. Some buyers may also be waiting for prices to drop, but lower interest rates may bring renewed competition from buyers who have been waiting get into the market and prices could continue to rise.
There may also be some degree of wait-and-see related to the upcoming U.S. presidential election.
There are many moving parts which impact the real estate market. Looking at a national snapshot, the Midwest had a bigger drop in pending sales than other areas of the country. But with a 4.2% year-over-year drop in July 2024, the Twin Cities was lower than the regional drop of 7.8%, which was higher than other areas of the country.
Bottom line is, regardless of what the market is doing people are always buying and selling for various reasons. Beware of paying too much attention to market conditions… what matters is when is the right time for you.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
