Pending home sales in the U.S. took a hit in July, falling 2.3% from June and 2.2% year over year, the National Association of Realtors (NAR) reported Tuesday.

It’s the slowest sales pace since January, a consequence of the double whammy of high mortgage rates and record-high home prices.

“The highest mortgage rates of the year hit right in the middle of summer, and that’s pulling back contract signings,” NAR Chief Economist Lawrence Yun observed in a press release. “Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations.”

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All four regions of the United States posted monthly declines in pending home sales, led by a 4.7% dip in the West. Sales fell 2.2% in the South, 2% in the Northeast and 0.7% in the Midwest.

Compared to July of 2025, only the Midwest eked out a gain, with pending sales rising 1.7%. The West was also the biggest faller on an annual basis, logging a 7.1% decline. Pending home sales fell 3% year over year in the South and decreased 0.2% in the Northeast.

Still, Yun believes improving labor market conditions may coax more buyers off the sidelines if mortgage rates improve.

“Right now, pending contracts are 30% below their pre-pandemic 2019 level, while payroll employment is 5% above,” he noted. “That gap points to sizable pent-up demand that should be unleashed in the coming years as more supply reaches the market and affordability improves.”

A separate report released Tuesday by Realtor.com suggests that a decrease in all-cash buyers could level the playing field for mortgaged homebuyers moving forward.

According to the listings platform, cash purchases accounted for 31.4% of home sales during the first four months of the year, down from 32.3% during the same period in 2025. And while total home sales fell 8.5% year over year during that span, the number of all-cash sales fell 11.2%.

“Cash buyers aren’t disappearing; they’re simply becoming less dominant as the housing market finds its footing,” Realtor.com Senior Economist Hannah Jones said in a press release.

“More inventory and moderating prices are giving financed buyers more opportunities to compete,” Jones added. “Cash still matters, but today its biggest advantage isn’t just winning bidding wars. It’s also giving sellers confidence that a deal will close quickly and with fewer surprises.”