Sales have also been hampered by the lack of available homes on the market, which has contributed to home prices climbing faster than incomes and pricing out some would-be buyers. The long-standing shortage of sales listings and persistently high prices have blunted the benefits of mortgage rates nearing all-time lows.
Ben Ayers, a senior economist at Nationwide, said the housing market was moving in fits and starts, reflecting the competing forces of low mortgage rates and a limited supply of homes, along with recession fears. Still, his outlook for the housing market remains solid.
"Sales activity continues to be weaker than expected, but there is nothing yet suggestive of a sharp pullback in the housing market," Ayers said. The pace of signed contracts dropped in all four regions of the country in July, with the West experiencing the greatest decline in activity.
Pending sales is a measure of home purchases that are usually completed a month or two later.