U.S. housing demand showed further strain in July as pending home sales—contracts signed to buy existing homes—dipped 0.4% from June, matching economists’ expectations after a 0.8% fall the previous month, the National Association of Realtors said. Compared with a year earlier, signings were up 0.7%, but activity remains near multi-year lows despite a modest retreat in mortgage rates. Supplies continue to build. NAR data place the inventory of new homes at roughly 9.2 months of sales, while separate Realtor.com figures point to double-digit annual increases in listings across major markets such as Texas and Florida. Analysts say elevated borrowing costs and rapid pandemic-era price gains have eroded affordability, keeping many potential buyers on the sidelines and pushing cancellation rates for pending deals to record highs. Price gauges are starting to soften. The S&P CoreLogic Case-Shiller index of the 20 largest U.S. cities slipped 0.3% in June, its fourth consecutive monthly decline, trimming annual growth to 2.1%—the weakest since mid-2023. Nationally, the average selling price climbed to $512,800 in the second quarter, more than $100,000 above the median of $410,800, underscoring a skew toward higher-end transactions. In an unusual twist, existing homes commanded a June median of $441,500, outstripping the $401,800 median for new construction as builders discounted smaller units to move excess stock. Despite the subdued fundamentals, homebuilder shares have rallied; Lennar’s forward price-earnings ratio is at a 10-year peak. Bloomberg Opinion columnist Conor Sen cautions that any sustained recovery will require either a sharper drop in mortgage rates or a broader reset in prices, neither of which appears imminent.