Pending home sales in the US unexpectedly fell for the second straight month in July as limited inventory and soaring prices discouraged some potential buyers.
A home sales index fell 1.8% from June to 110.7, a three-month low, according to data released Monday by the National Association of Realtors. The median forecast in a Bloomberg survey of economists called for an increase of 0.3%.
The numbers highlight how sky-high prices on a limited number of offers are deterring many Americans from buying a home. Looking ahead, easing storage restrictions, coupled with still low borrowing costs, should support buyer demand.
"The market may start to cool slightly, but right now there isn't enough supply to meet demand from potential buyers," NAR chief economist Lawrence Yun said in a statement. "Still, inventory is slowly increasing and home shoppers should see more options in the coming months."
Compared to the previous year, unadjusted contracts signed fell by 9.5%.
Signings declined in three out of four US regions from the previous month, led by a 6.6% decline in the Northeast. In the west, the number of contracts signed rose by 1.9%.
A separate report last week showed that sales of previously owned U.S. homes rose for a second month in July, suggesting firmer demand for homes as inventory restrictions eased slightly. However, prices have skyrocketed in the wake of the pandemic. The average sales price of a previously owned home increased 17.8% year over year to $ 359,900 in July.
Unlike existing home sales, which are calculated at the time the contract is signed, the pending home sales index is based on contract signings.