- POSTED: 27 Sep 2013 00:21
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US pending home sales slowed for a third straight month in August, amid rising mortgage interest rates and home prices, a key industry group said on Thursday.
WASHINGTON: US pending home sales slowed for a third straight month in August, amid rising mortgage interest rates and home prices, a key industry group said on Thursday.
The National Association of Realtors (NAR) said its pending home sales index fell 1.6 percent to 107.7 in August from a downwardly revised 109.4 in July.
The decline was less than the 2.3 percent drop expected by analysts.
Pending sales of previously owned homes - a forward-looking indicator based on contract signings - had spiked higher in May to a 111.3 index reading.
Mortgage interest rates jumped in May after the Federal Reserve signaled it could begin easing its $85 billion a month bond purchases in the coming months if the economy continued to improve.
But pending home sales since have fallen for three months in a row under pressure from tight inventory on the housing market, rising home prices, restrictive lending and higher interest rates, NAR said.
"Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month," said Lawrence Yun, NAR chief economist.
"Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead."
Of the four US regions covered in the August report, only the Northeast had an increase in pending home sales: 4.0 percent. The South was the worst-hit, down 3.5 percent.
The housing market has been recovering slowly from the 2006 collapse of the price bubble. Pending home sales year-over-year rose for the 28th month in August, with contracts up 5.8 percent from August 2012.
"The housing market is not rolling over, but it does seem to be losing steam," said Ian Shepherdson of Pantheon Macroeconomics.