Contract signings to purchase previously owned homes unexpectedly declined in August for just the second time this year, signaling residential real estate might have difficulty building on recent momentum.
An index of pending home sales
A scant supply of homes for sale that's keeping prices elevated is hampering demand. At the same time, historically low mortgage rates and steady employment gains should help underpin the market as the broader U.S. economy battles headwinds from dollar appreciation and slower overseas growth.
"Pending sales have leveled off since midsummer, with buyers being bounded by rising prices and few available and affordable properties within their budget," NAR chief economist Lawrence Yun said in a statement.
Estimates in the Bloomberg survey of 37 economists ranged from a decrease of 4.2% to an advance of 1.5%.
Purchase contracts increased 6.7% in the 12 months ended in August after a 7.2% annual gain in July on an unadjusted basis, the NAR report showed.
The pending sales index was 109.4 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or "historically healthy" home-buying traffic, according to the NAR.
Pending sales dropped in three of four regions, including declines of 2.2% in the South and 5.6% in the Northeast. Purchase contracts fell 0.4% in the Midwest and rose 1.8% in the West.
Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.
Resales, which make up about 90% of the market, dropped in August from the strongest since 2007, the NAR reported last week. Inventories decreased 1.7% from a year earlier, showing lean stockpiles could limit the enthusiasm of potential homebuyers who have fewer properties to choose from.
