The index of pending home sales fell 1.6%, after a revised 1.4% decrease in July that was bigger than initially reported, figures from the National Association of Realtors showed Thursday in Washington. Economists forecast a 1% decline in the gauge from the month before, according to a median estimate in a Bloomberg survey.
Mortgage rates that hit their highest in August since July 2011 and a limited number of existing homes may have caused some prospective buyers to hold back, slowing the real estate recovery. Employment growth and gains in income could help buyers to afford houses, fueling the broader economy.
“We didn’t have a particularly good second quarter, we’re not producing big increases in payrolls, so that kind of supports a plateau,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “There’s a little bit of indigestion on the part of potential homebuyers because mortgage rates have come up more than a percentage point. However, I think it’s only indigestion. I don’t think it’s anything fatal to the housing industry.”