"The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown"
- Lawrence Yun, National Association of Realtors economist
Signed contracts to purchase existing home in the United States faltered last month, as homebuyers are facing higher interest rates and rising property prices. A measure of pending home sales from the National Association of Realtors tumbled 1.3% from June, when it recorded a 0.4% drop; nevertheless, still 6.7% higher than in the same month a year earlier. Analysts, however, expected pending home sales to rise 0.2% on a monthly basis. Soaring mortgage rates appear to hamper the recovery in the country's property market, as the 30-year mortgage rate rocketed to 4.92%, reaching a two-year high. Furthermore, limited number of existing home are pushing home prices higher, while several prospective buyers were forced out of the market, threatening to slow the pace of recovery.
Amid other negative news from the housing market, sales of newly built homes fell 13% in July, while single family housing starts plunged 2.2% over the same period. The group projects that existing-home sales would climb to 5.1 million this year, and accelerate to 5.2 million over the next year. Nevertheless, strength in the labour market and stable income growth should provide additional fuel for housing, which was one of the main sources of strength for the economy.
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