US housing indicators weaken as affordability strains buyers and builders

Two closely watched US housing indicators weakened, underscoring the pressure from elevated borrowing costs, record prices and high building expenses. The National Association of Realtors said pending home sales fell 5.4% in June from May, while the National Association of Home Builders said single-family builder sentiment declined in July to its weakest level in almost a year.

The NAR’s pending sales index tracks signed contracts for existing homes, making it a relatively current measure of buyer activity before transactions close. The association said June pending sales were also 0.3% below the same month in 2025 and came in well short of analysts’ expectations.

Lawrence Yun, the NAR’s chief economist, said in a release that the combination of the highest mortgage rates in nearly a year and a record national median home price was holding back the market, with first-time buyers facing particular strain.

Mortgage News Daily said the average rate on the 30-year fixed mortgage began June at 6.6% and ended the month at the same level, after moving within a relatively narrow higher range. The rate had been as low as 5.99% at the end of February, according to Mortgage News Daily.

Higher mortgage rates reduce purchasing power because buyers must devote more of each monthly payment to interest. For sellers, elevated rates can also discourage listings when existing homeowners have lower-rate mortgages, which can limit supply and keep prices firm.

Recent loan demand has reflected that pressure. Mortgage applications to buy a home were 2% lower last week than in the comparable week a year earlier, even though mortgage rates were slightly higher at that point last year.

Builders report weaker conditions

The NAHB said its July sentiment index for single-family builders fell to 34 from an upwardly revised 36 in June. Readings below 50 indicate negative sentiment, and the index has remained under 40 for 15 consecutive months, the longest such stretch since 2012, according to the NAHB.

Robert Dietz, the NAHB’s chief economist, said in a release that affordability remained the central challenge for homebuilders. He cited elevated mortgage rates, expensive land, rising material prices and continued shortages of skilled labor as factors weighing on the market.

Builders have increasingly used discounts and incentives to generate sales, according to the NAHB. The group said 37% of builders cut prices in July, up from 35% in June and 32% in May. It also said 63% used sales incentives in July, compared with 62% in June. The share using incentives has been at or above 60% for 16 straight months.

Dietz said newly enacted housing legislation from Congress, designed to reduce red tape and help localities speed permitting, was a constructive step toward expanding supply and lowering overall housing costs. He added that additional policy changes were needed at the state and local levels.

The NAR said the median price of an existing home reached a new record in June. While some local markets have shown weakness, the association said limited housing supply overall has continued to support prices.

Peter Boockvar, chief investment officer of OnePoint BFG Wealth, wrote that housing remained a weak part of the US economy. Citing the NAHB, he said housing accounts for about 15% to 18% of US economic activity when measured broadly.

This story draws on original reporting from CNBC.