WASHINGTON (Reuters) – Contracts to buy U.S. second-hand homes fell less than expected in July as mortgage rates fell slightly, pulling some buyers back into the housing market.
The National Association of Realtors (NAR) said Wednesday that its index of pending home sales based on signed contracts fell 1.0% to 89. In August, it was the lowest level since April 2020. Contracts have been reduced in eight of the past nine months.
In July, the Northeast, South China, Midwest contracts fell, and the West rose.
Economists polled by Reuters had forecast a 4.0% drop in contracts that become sales in a month or two. Home sales for sale in July were down .9% year over year.
Annual fixed rate mortgages fell to 5. from 5.89% in mid-June %, according to Mortgage Financial Institutions Freddie Mac as of end-July) (OTC: FMCC). The rate at the beginning of the year was 3.22%.
“For the current housing cycle, our chief economist at NAR Home Lawrence Yun said. “Inventory of higher-priced homes is building, but limited supply at lower price points is hindering transaction activity. “
The housing market is a key area of the economy for the Fed’s aggressive monetary policy. Tightening policies to slow demand to rein in inflation are bearing some results. New home sales fell to 6-1/2 in July, data on Tuesday showed Year low.
Home resale and single-family home starts are at two-year lows. The National Association of Home Builders/Wells Fargo Housing Market Sentiment Index has since Dropped below August breakeven level for the first time since May 2020, other reports last week Show.
But with house prices still high due to a severe shortage of affordable housing, the housing market is unlikely to collapse.