Contracts to purchase previously owned U.S. homes fell more than projected in May, a sign that demand cooled after a robust start to the busiest selling season of the year, figures from the National Association of Realtors showed.
Bloomberg News reported that the NAR’s index of pending home resales fell 3.7 percent, although the forecast was for a 1.1 percent drop. That was the largest dip in six years after a revised 3.9 percent increase in April.
Pending sales declined in all four regions of the country, including a 4.2 percent drop in the Midwest index to the lowest level since January.
The sales gauge declined to 110.8 on a seasonally adjusted basis, with 100 indicating “historically healthy” buying activity.
Home price appreciation and a limited supply of available properties are hurting sales, and first-time buyers or Americans with lower income and poor credit are finding it difficult to qualify for financing, Bloomberg reported.
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.”