After reaching the highest level in over six years, pending home sales declined in June, with rising mortgage interest rates beginning to impact the market while higher home prices reduce affordability in high-cost regions, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, edged down 0.4 percent to 110.9 in June from a downwardly revised 111.3 in May, but is 10.9 percent higher than June 2012 when it was 100.0; the data reflect contracts but not closings.
Pending sales have been above year-ago levels for the past 26 months, and the pace in May was the highest since December 2006 when it reached 112.8.
"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," Lawrence Yun, NAR chief economist, said. "The persistent lack of inventory also is contributing to lower contract signings."