Contracts to purchase previously owned homes fell more than projected in May, a sign demand cooled after a robust start to the busiest selling season of the year, figures from the National Association of Realtors showed Wednesday in Washington.
The index of pending home resales fell 3.7% (the forecast was a 1.1% drop), the most in six years, after a revised 3.9% increase in April.
Home price appreciation and a limited supply of available properties are bridling sales, while first-time buyers or Americans with lower incomes and poor credit are finding it difficult to qualify for financing. A potential loss of momentum in housing would trigger concern at a time when growth is restrained by weak business investment and U.S. exports.
"There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth," NAR chief economist Lawrence Yun said in a statement. "With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity."
NAR projects 5.44 million previously owned homes will be sold this year, up 3.7% from 2015. Contract signings dropped 5.3% in the Northeast, 3.1% in the South and 3.4% in the West.
