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.