Higher prices are beginning to take their toll on U.S. home buyers. Signed contracts to buy existing homes fell unexpectedly in June, down 1.8 percent from May, according to the pending home sales index from the National Association of Realtors. This comes after five straight months of gains; sales are still 8.2 percent higher than June of 2014.
"Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers' comfort level," said Lawrence Yun, chief economist for the Realtors. "The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows."
Tight supply has plagued the housing recovery for the past year, as potential sellers are either underwater on their mortgages or afraid they won't be able to find another home to buy. The nation's home builders are also still operating well below historic and current demand levels. The supply of homes for sale in June fell slightly as sales rose.