The number of homes in the U.S. that went under contract fell in August to the lowest level since January, the latest sign the housing market lost momentum in recent months.
Continue Reading Below
An index of pending home sales, reflecting tentative purchases of previously owned homes, fell 2.4% in August to a reading of 108.5, the National Association of Realtors said Thursday. Economists surveyed by The Wall Street Journal expected sales to be flat in August.
Pending sales offer an early peek at the direction of the housing market because they measure sales at the time a contract is signed, but before "closing," or when it becomes final. The closing process typically takes weeks or months, and many contracts are canceled for a variety of reasons.
Pending sales have fallen for three of the past four months. Over the past year, pending sales have decreased 0.2%. The figures mimic other reports suggesting Americans are reducing purchases of home sales after a surge in buying earlier this year.
The most closely watched measure of housing -- the Realtors group's monthly report on existing home sales -- showed that home sales have fallen for two consecutive months. Sales of existing homes, as opposed to newly built homes, reflect roughly 90% of the market.
Earlier this summer, existing-home sales, which measure purchases once they are final, reached the highest level since 2007.
Lawrence Yun, the NAR's chief economist, attributed the dip in sales to a run-up in prices in recent years and shortage of for-sale homes. Many prospective buyers today are now unable to afford to buy or aren't happy with the few options available on the market, he said.
"Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract," Mr. Yun said in a statement.
Despite the latest weakness, the housing market remains solid overall. And the ingredients for steady growth -- persistently low mortgage rates and strong job growth -- remain in place.
Thursday's report showed sales rose in the Northeast in August from July but declined in the West, Midwest and South.
Write to Josh Mitchell at email@example.com