Pending home sales decreased in June 8.6% on a month-over-month basis to an index reading of 91.0, according to the National Association of Realtors (NAR). On a year-over-year basis, the Pending Home Sales Index (PHSI) decreased 20%. An index of 100 is equal to the level of contract activity in 2001.

“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” says NAR chief economist Lawrence Yun. “There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize.”

According to the NAR, buying a home in June was approximately 80% more expensive than in June 2019. Nearly a quarter of buyers who purchased a home three years ago would be unable to do so now because they no longer earn the qualifying income to buy a median-priced home today.

“Home sales will be down by 13% in 2022, according to our latest projection,” says Yun. “With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023.”

The PHSI fell on a month-over-month basis in all four of the major U.S. regions. The index decreased 6.7% in June compared with May and fell 17.6% compared with June 2021. The Midwest index fell 3.8% on a month-over-month basis and 13.4% on a year-over-year basis.

Pending sales slipped 8.9% compared with the previous month in the South and decreased 19.2% compared with a year ago. The West PHSI fell 15.9% on a month-over-month basis and 30.9% on a year-over-year basis.