The number of homes across the U.S. that went under contract fell for the second straight month in April, a signal tight supply and rising home prices are starting to deter prospective buyers.
The National Association of Realtors' pending home sales index, which tracks signings for purchases of previously owned homes, decreased 1.3% from a month earlier to 109.8, the trade group said Wednesday. Economists surveyed by The Wall Street Journal had expected sales to rise 0.5%.
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The April index is down 3.3% from a year earlier, the first year-over-year decline since December and the steepest drop since June 2014.
Lawrence Yun, NAR chief economist, said he doesn't foresee low supply levels going away any time soon.
"Prospective buyers are feeling the double whammy this spring of inventory that's down 9% from a year ago and price appreciation that's much faster than any rise they've likely seen in their income," 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. Many contracts are canceled before closing, as last-minute disputes can arise between buyers and sellers.
The S&P CoreLogic Case-Shiller Indices, which covers home-price fluctuations in the entire nation, rose 5.8% in the 12 months ended in March, the fastest rate in 33 months. Many economists say they are concerned that price growth that continues to outpace income growth isn't sustainable.
The NAR's more closely watched measure, existing-home sales, fell 2.3% in April from the prior month, as buyer demand outstripped supply, the trade group said last week. This figure tracks closing sales of previously owned U.S. homes.
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(END) Dow Jones Newswires
May 31, 2017 10:18 ET (14:18 GMT)