Pending home sales fell 1.6% on the month in August, falling for the fourth straight month. missing expectations for a 1 per cent fall.
They were also up a more modest 2.9% year-over-year, compared with expectations for a 6.3% rise.
Meanwhile, July’s numbers were marginally revised lower to show a 1.4% mum fall, and an 8.5% YoY rise.
“Sharply rising mortgage interest rates in the spring motiv[at]ed buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalised last month,” said NAR chief economist Lawrence Yun in a press release.
“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.”
Here’s a look at the regional breakdown:
In the Northeast the pending home sales index (PHSI) was up 4% on the month, and up 5.1% from a year ago.
In the Midwest it fell 1.4% on the month, but is up 13.8% from a year ago.
In the South the index fell 3.5% on the month, but is up 3.7% from a year ago.
In the West it was down 1.6% on the month, but is up 1.7% from a year ago.
Economists have been watching for the impact of higher mortgage rates on pending home sales activity and other housing data.
The 30-year mortgage rate is at two-year highs of 4.50% in the week ending September 19.
New home sales climbed 7.9% on the month in August, but this wasn’t enough to offset the 14.1% fall in July, and the decline in July. Existing home sales have so far been beating new home sales, rising 1.7% on the month to an annualized pace of 5.48 million.
Moreover, homebuilder confidence has stalled and housing starts have disappointed markets.
Investors watch this number because it is considered a leading indicator of the housing market. The PHSI looks at all homes where a contract has been signed but the sale is not complete.