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Home Sales Set to Increase as Mortgage Rates Continue to Fall

The summer housing market is getting hot—and it’s not just thanks to the heat dome blanketing much of the country.

Home sales are projected to rise in the next few weeks as mortgage rates have now declined for four straight weeks and more properties are going up for sale.

Pending home sales, an indicator of future home sales based on signed real estate contracts, rose by 1.8% in May compared to April, according to new data from the National Association of Realtors. They were also up 1.1% year-over-year.

(This was just for existing homes, which excludes new construction.)

The expected increase in home sales comes as mortgage rates are declining and the number of homes on the market is on the rise.

Mortgage rates averaged 6.77% for 30-year, fixed-rate loans in the week ending June 26, according to Freddie Mac data. That’s down from 6.81% last week. Rates are now lower than they’ve been in more than a month.

And while the decline isn’t substantial, every little bit helps with affordability.

Freddie Mac Chief Economist Sam Khater noted the recent “stability” in rates should provide some solace to would-be homebuyers.

“Borrowers should find comfort in the stability of mortgage rates, which have only fluctuated within a narrow 15-basis point range since mid-April,” Khater said in a release. “Although recent data show that home sales remain low, the resulting available [housing] inventory provides homebuyers with a wider range of options to consider when entering the market.”

The number of existing homes for sale was 20.3% higher in May 2025 than it was in May 2024, according to a separate report from NAR. The report showed that there are approximately 260,000 more homes on the market than there were last year at this time.

Combine the increase in available homes with declining mortgage rates and the result appears to be an increase in home sales.

"Consistent job gains and rising wages are modestly helping the housing market," said NAR Chief Economist Lawrence Yun in a statement. "Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains."

According to the NAR report, all four regions saw a monthly increase in pending home sales. The Northeast saw pending home sales rise by 2.1% month-over-month, while the Midwest had a slight 0.3% increase, and the South increased by 1%.

Meanwhile, pending home sales rose by 6% in the West.

Yun said that these regional differences are the result of the market conditions in each area.

“The Northeast's housing shortage is boosting home prices, with more than a quarter of homes selling above list price,” Yun said. “Conversely, more inventory in the South gives home buyers greater negotiation power. Price declines in the South should be considered temporary given the region's strong job creation."

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Managing Editor, New American Funding

As Managing Editor, Ben helps with content creation, news coverage, and serving our audience of borrowers, real estate agents, loan originators, and other housing professionals.

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