Rising rates zap pending US home sales momentum
Contracts to purchase previously owned U.S. homes fell in June, retreating from a more than six-year high touched the prior month, suggesting rising mortgage rates were starting to dampen home sales.
The National Association of Realtors said on Monday its Pending Homes Sales Index, based on contracts signed last month, decreased 0.4 percent to 110.9. May's index was revised down to 111.3 from a previously reported 112.3.
Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to fall 1.0 percent.
Compared to last year contracts were up 10.9 percent.
"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."
Rates on 30-year fixed rate mortgages have climbed about a full percentage point since early May on expectations the U.S. Federal Reserve may begin scaling back its bond-buying stimulus program as early as September.
Contracts were up in the West, but down in the Midwest and South. The index for the Northeast was unchanged.