The housing recovery appears to be making a U-turn as mortgage rates rise amid a critically low supply of homes for sale.
Pending home sales, which measure signed contracts, not closings, fell 4.7 percent in January compared with December, according to the National Association of Realtors. It is the lowest point in nearly four years.
The weakness was nationwide, and December's reading was also revised lower. Pending sales, which are an indicator of future closings, were 3.8 percent lower than January 2017.
"The economy is in great shape, most local job markets are very strong and incomes are slowly rising, but there's little doubt last month's retreat in contract signings occurred because of woefully low supply levels and the sudden increase in mortgage rates," said Lawrence Yun, chief economist for the Realtors. "The lower end of the market continues to feel the brunt of these supply and affordability impediments."