Pending home sales slowed in August, thanks to market headwinds generated by tight inventory, rising interest rates, increased home prices and still-tight credit, the National Association of Realtors (NAR) reported.
A forward-looking indicator based on contracts signed to purchase homes, pending home sales dropped 1.6 percent month over month in August, but were up 5.8 percent on an annual basis, according to NAR.
“Sharply rising mortgage interest rates in the spring motivated buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” said NAR Chief Economist Lawrence Yun in a statement.
The trade organization also forecast that existing-home sales will remain flat in 2014, edging up less than 1 percent following an expected increase of 11 percent in 2013.
“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,” Yun said.