In one of the latest indications that buyers may be feeling the pinch of a recent surge in mortgage interest rates, pending home sales slipped 1.3 percent in July compared to June, according to the National Association of Realtors.
Despite the slight drop, pending home sales — a forward-looking indicator based on contract signings — were still up 6.7 percent in July from a year before, and had remained above year-ago levels for 27 consecutive months.
“… Higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West,” said Lawrence Yun, chief economist at NAR. “More homes clearly need to built in the West to relieve price pressure, or the region could soon face pronounced affordability problems.”
Last week brought word that new-home sales had plummeted 13.4 percent month over month in July, a drop that some observers attributed to a recent spike in interest rates.
In reporting pending home sales today, NAR said that those higher rates slowed the market in July.
NAR forecast that existing-home sales should increase 10 percent for all of 2013 to hit about 5.1 million, and then climb to 5.2 million in 2014.
The trade group also said it expects home prices to grow by 11 percent in 2013 and 5 to 6 percent in 2014.