WASHINGTON – Pending sales of U.S. homes edged lower in March, signaling weaker sales ahead, as rising mortgage rates weigh on the market, a trade group said Tuesday.
The Pending Home Sales Index, based on contracts signed in March, stood at 116.2 in March, down 1.2 percent from February and 6 percent below a year ago, according to the National Association of Realtors.
It was also weaker than Wall Street expected. Economists had pegged the index at 117 for March.
"Home sales rebounded from the slide that started last fall, but the pending sales data is showing a dampening effect from rising mortgage interest rates that have been trending up since January," said David Lereah, the Realtors' chief economist.
"This means a modest slowing can be expected in the sales pace in the months ahead, although the market will hold at historically strong levels," he said.
The Pending Home Sales Index includes pending sales of existing single-family units, condominiums and co-ops. A home sale is pending when the contract has been signed but the transaction has not closed.
Pending sales will typically close within one or two months of contract signing.
After a run-up that shattered construction and sales records, the U.S. housing market began to slow as mortgage rates started to climb. But many economists expect the housing market to remain strong in 2006, posting its third best year after records in 2004 and 2005.