WASHINGTON – Pending home sales rose slightly in September, but contract signings are depressed from a year ago as affordability has become a greater challenge for would-be buyers.
The National Association of Realtors said Thursday that its pending home sales index increased 0.5 percent last month to 104.6. But over the past year, this metric declined 1 percent.
Homebuying has slowed as mortgage rates have jumped in the past year, one of the consequences of President Donald Trump's deficit-funded tax cuts and tightening of interest rates by the Federal Reserve. The interest charged for a 30-year fixed rate mortgage averaged 4.86 percent this week, up from 3.94 percent a year ago, according to mortgage buyer Freddie Mac.
Higher borrowing costs have compounded problems caused by home prices consistently rising faster than wage growth, making it harder for renters to become homeowners. Completed sales of both existing and newly built homes plummeted in September.
Pending sales are a barometer of home purchases that are completed a month or two later.
This measure last month slipped in the Northeast and South but improved in the Midwest and West.