Washington, DC, United States (4E) – The number of people signing contracts to purchase homes that are previously owned declined in July for the second consecutive month, a signal that rising mortgage rates are putting the brakes on the housing recovery.
The pending home sales index fell 1.3 percent, the biggest decline this year, after it declined 0.4 percent in June, according to a National Association of Realtors report released Wednesday in Washington.
Economists’ median estimate called for the index to remain unchanged from the previous month, according to a Bloomberg News survey.
In Bloomberg survey, 38 economists’ prediction of pending home sales ranged from a decline of 3 percent to a gain of 5.3 percent.
Given the manner of how pending home sales data are gathered – at the signing of a contract, instead at the closing of the transaction – they offer a clearer snapshot on the housing-market conditions compared to other indicators.
The average 30-year fixed-rate mortgage for loans of up to $417,000 jumped to 4.80 percent last week, the Mortgage Bankers Association reported on Wednesday.
Since the U.S. Federal Reserve began announcing that it could scale back its bond-buying program aimed to lower borrowing costs and boost the economic recovery, interest rates have started to rise.