Signed contracts to buy existing homes faltered in July, as home buyers faced significantly higher interest rates along with rising home prices. The pending home sales index from the National Association of Realtors fell 1.3 percent from June but is still 6.7 percent higher than July 2012. These contracts indicated lower home sales closings in August and September.
"The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown," NAR chief economist Lawrence Yun said in a statement. "However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West."
Pending home sales fell in three out of four regions in July. Contract activity month to month was down 6.5 percent in the Northeast, down 4.9 percent in the West and off 1 percent in the Midwest. Activity was higher by 2.6 percent in the South.
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