Pending home sales fell 1.1% in October

U.S. home buyers signed fewer contracts to buy existing homes in October, even as the number of homes for sale increased.

A monthly index from the National Association of Realtors of so-called pending home sales fell 1.1 percent from an upwardly revised September reading, but is 2.2 percent higher than it was in October of 2013. This is the second straight month of annual gains. These pending sales are an indicator of closed sales one to two months from now.

Meanwhile, inventory of for-sale homes was 5 percent higher in October than it was a year ago, according to the Realtors. The number of listings usually drops in the fall and winter, but more sellers are being drawn into this market now, thanks to higher home prices. Despite the drop in signed contracts, though, the Realtors say home sales remain at a "healthy" pace.

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"In addition to low interest rates, buyers entering the market this autumn are being lured by the increase in homes for sale and less competition from investors paying case," said Lawrence Yun, chief economist for the Realtors.

Pending home sales
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Regionally, pending home sales increased only in the Northeast, up just 0.5 percent month-to-month. Sales declined on a monthly basis in all other regions of the country.

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"Demand is holding steady but would be more robust if it weren't for lagging wage growth and tight credit conditions that continue to hamper those individuals looking for relief from rising rents," added Yun.

Closed sales of existing homes rose in October to the highest level in a year, as home price gains continue to ease. Mortgage rates are still hovering near historic lows, but mortgage purchase applications fell last week, suggesting weaker home sales ahead.

Still, the Commerce Department reported Wednesday that sales of new U.S.single-family homes rose for a third straight month in October, but a downward revision to the prior month's sales pace indicated the housing market recovery would remain gradual.

Sales gained 0.7 percent to a seasonally adjusted annual rate of 458,000 units. September's sales pace was revised down to 455,000 units from 467,000 units. Economists polled by Reuters had forecast new home sales rising to a 472,000-unit pace last month.

New home sales, which account for about 8 percent of the housing market, tend to be volatile month to month. Compared to October last year, sales were up 1.8 percent.

—Reuters contributed to this report.