Rising rates and prices erode pending home sales

Pending home sales declined in June as buyers began to feel the squeeze of rising mortgage rates and home prices, the National Association of Realtors (NAR) reported.

A forward-looking indicator based on contracts signed to purchase homes, pending home sales decreased 0.4 percent in June, but were still up 10.9 percent from a year ago, NAR said.

The decrease comes after pending home sales in May hit their highest level since December 2006.

“Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June,” said NAR Chief Economist Lawrence Yun. “The persistent lack of inventory also is contributing to lower contract signings.”

“Closed sales may edge down a bit in the months ahead, but they’ll stay above year-ago levels,” Yun added. Source: NAR