15 November 2018

Housing Recovery Stumbles With Drop In Pending Sales

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Pending sales contracts for previously-owned homes fell for the second straight month in July taking momentum from the U.S. housing market recovery. Rising mortgage rates have played a big role in slowing sales.

The National Association of Realtors reported its Pending Homes Sales Index, based on contracts signed last month, fell by 1.3 percent to 109.5. This decrease was greater than analysts’ expectations and may have an influence on the Fed’s decision to taper its bond-buying program. Pending sales fell nationally, with higher drops reported in the Northeast and the West.

Even with rates at historic lows, lending activity has showed signs of slowing with loan applications having dropped sharply since May.

The housing markets showed signs of improvement starting in early 2012 with rising home prices, but mortgage rates jumped more than a percentage point when the Fed began to hint at tapering the bond-buying program in May. According to Mortgage Bankers Association data, the average rate for 30-year mortgages jumped 12 basis points to 4.8 percent last week. 

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