The number of homes across the U.S. that went under contract fell in May for the third straight month, as fast-rising prices and tight inventories weigh on a market characterized by solid demand.
The National Association of Realtors' pending home sales index, which tracks signings for purchases of previously owned homes, decreased 0.8% from a month earlier to 108.5, the trade group said Wednesday. Economists surveyed by The Wall Street Journal had expected sales to rise 0.8%.
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The May index is down 1.7% from a year earlier.
Lawrence Yun, NAR chief economist, said housing supply is struggling to keep up with solid buyer demand.
"Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast," Mr. Yun said.
The index offers a timely but imprecise look at the housing market because it measures sales at the earliest stage of the often weeks-long purchasing process--when contracts are signed, but before the final step, known as closing. Some contracts are canceled before closing.
The NAR's more closely watched measure, existing-home sales, rose 1.1% in May from the prior month, the trade group said last week. Existing-home sales represent closings on previously owned U.S. homes.
The median sale price in May for an existing home was $252,800, the highest nominal level on record, the NAR said last week. Many economists have expressed concern that fast-rising prices that outpace income growth aren't sustainable.
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(END) Dow Jones Newswires
June 28, 2017 10:14 ET (14:14 GMT)