The American housing market picked up in August, with more homes going under contract both compared to July and to the same time last year, according to the National Association of Realtors (NAR). In August, pending home sales increased by 4% from July and were 3.8% higher than in August 2024.
Homes under contract but not yet sold increased in the Midwest, South and West regions of the United States. However, they decreased in the Northeast during the same period, compared to the previous month.
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“Lower mortgage rates are enabling more home buyers to go under contract,” NAR Chief Economist Lawrence Yun said in the report. “In the Midwest, low mortgage rates combined with high levels of affordability are attracting more buyers compared to other regions.”
Buyer traffic expected to rise
In August, 19% of realtors told NAR they expect buyer traffic to increase in the next three months. This is up from last month, though it remains the same as a year ago.
Meanwhile, 19% of realtors expect more seller traffic, which is slightly lower than last month but slightly higher than August 2024.
More homes went under contract in August, which may lead to higher home sales in the early fall. This increase was likely helped by slightly lower mortgage rates, which have continued to decline since then.
Fed moves spark rate drop
Mortgage rates dropped slightly in August, going from 6.72% in July to 6.59%, after the Federal Reserve announced it would cut rates in mid-September. Since homebuyers and lenders were already expecting that the Federal Reserve would cut interest rates, the effects of those anticipated cuts were already reflected in new mortgage applications.
Since then, rates have continued to decline, reaching an average of 6.3% as of last week, according to Freddie Mac. These falling rates likely made it more affordable to buy a home, which may have contributed to the recent increase in homebuying activity, according to Realtor.com.
