Pending Home Sales Edge Up in August Despite Higher Rates

Pending home sales rose slightly in August on a monthly basis, but fell year over year as climbing mortgage rates kept many prospective buyers on the sidelines.

Contract signings ticked up 0.3% from July, but plunged 4.7% compared to August 2025, according to the National Association of Realtors^® Pending Home Sales report released Thursday.

"Buyers steadily entered into contracts in August even though mortgage rates increased," says NAR Chief Economist Lawrence Yun. "However, the housing market is still sluggish, with contract signings below last year. This is due to higher mortgage rates offsetting the increased buying power created by job gains and income growth outpacing home price growth."

Yun points out that nationally, current contract activity remains roughly 30% below pre-pandemic years. Transactions peaked in 2021 when mortgage rates fell to historic lows near 3% and has not approached that level since.

Mortgage rates have been on an upward trajectory since the outbreak of the U.S.-Iran war in February. Last week, the average rate on 30-year fixed home loans reached a 15-month high of 6.76%.

In August, month-over-month pending sales saw gains in the South and West, but retreated in the Northeast and Midwest. Meanwhile, the year-over-year pullback was recorded throughout the U.S., even with home listing prices falling for a 10th consecutive month.

"The Northeast and the Midwest saw the fastest home price growth in August, which is part of the reason that those same two regions posted the steepest declines in contract signings," says Yun.

At the regional level, the Northeast saw the biggest month-over-month pullback in contract signings, which decreased 4.2%, followed by the Midwest, at 1.6%. The South and West gained 2.3% and 3%, respectively, boosted by more for-sale inventory and softening prices.

Looking at annual shifts in pending sales, the West experienced a 6.7% drop, followed by the Midwest (4.9%); Northeast (3.9%), and South (3.8%).

Among the 50 largest markets, Richmond, VA, led the nation with a 11.3% year-over-year surge in pending sales. San Antonio, TX, came a distant second, with a 6.6% increase, followed by Memphis, TN, with 6.4%.

Metros with biggest pending home sale increases in August

1. Richmond, VA (+11.3%)
2. San Antonio, TX (+6.6%)
3. Memphis, TN (+6.4%)
4. Virginia Beach, VA (+5.1%)
5. Cincinnati, OH (+4.7%)
6. Austin, TX (+4.2%)
7. Birmingham, AL (+4.0%)
8. Sacramento, CA (+1.7%)
9. Indianapolis, IN (+0.9%)
10. St. Louis, MO (+0.2%)

What this means for buyers and sellers

Contract signings between buyers and sellers mark the first formal step in the homebuying process and typically lead closings by one to two months, making them a useful gauge of near-term activity.

The softening in July carried through the pipeline and existing-home sales eased on both a monthly and annual basis in August, according to Realtor.com® senior economist Hannah Jones.

Jones warns that the muted summer market could carry into fall, as mortgage rates show no signs of easing. Markets have largely priced in Wednesday's Federal Reserve rate hike, keeping upward pressure on rates rather than offering buyers relief.

With borrowing costs unlikely to decrease meaningfully before the end of 2026, Jones says the fall advantage for buyers will come less from mortgage rate improvements and more from seasonal timing.

Looking ahead, Jones stresses that the fall market tends to favor buyers, with inventory peaking, prices easing, the market pace slowing, and sellers growing more flexible. These factors align most favorably for buyers during the Best Time to Buy, which falls in the first week of October this year.

"While the exact week varies by metro, most large markets see buyer-friendly conditions align within a month of that early-October date, meaning the window is approaching for buyers looking to act before year end," she adds.