Pending home sales that withered in July edged up in August but remained nearly 5% below levels observed a year ago, the National Association of Realtors (NAR) reported Thursday.

On a monthly basis, the number of homes under contract rose in the South and West and declined in the Northeast and Midwest. Pending home sales fell across the entire U.S. year over year, underscoring persistent affordability challenges weighing on demand.

A sale is listed as pending when the contract has been signed but the transaction has not closed. The sale is usually finalized within the next month or two.

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“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,” explained NAR Chief Economist Lawrence Yun in commentary alongside the report.

Median existing-home sales prices were up 4.3% in the Northeast and 3.3% in the Midwest from a year ago in August, compared to a 0.7% gain in the South and a 0.2% decline in the West.

Besides high home prices, average mortgage rates that began 2026 around 6% spent most of August around 6.8%, reflecting the steady increase in home financing costs since the Iran war began in late February. Mortgage rates have only risen since, hovering around 7% during the first two weeks of September.

“Housing and mortgage activity slowed abruptly as mortgage rates moved higher over the past several weeks,” said Mike Fratantoni, chief economist of the Mortgage Bankers Association (MBA), after the Federal Reserve’s announcement of a quarter-point increase to the federal funds rate, which now sits in a target range of 3.75% to 4%.

“MBA forecasts two additional hikes from the Fed over the next year and expects mortgage rates to stay near current levels over the forecast horizon,” added Fratantoni.

Adding historical perspective in Thursday’s pending home sales report for August, Yun pointed out that contract signings are tracking roughly 30% below typical levels observed “in the years leading up to the pandemic.”

Across the 50 largest U.S. metros, Virginia’s capital city of Richmond posted the largest growth in pending sales activity, rising 11.3% year over year in August. San Antonio saw 6.6% annual growth, followed by Memphis, Tenn., at 6.4%.