US NAR: Mortgage Contract Activity Fell In July As Rates Rose

WASHINGTON (MNI) – Contracts signed in the United States to purchase a home
but not yet closed slowed in July, as higher mortgage rates and rising home
prices weighed on housing market activity.

The National Association of Realtors said Wednesday that the Pending Home
Sales index fell 1.3% to a level of 109.5 in July, although it is still 6.7%
above July of last year – when the NAR’s pending home sales index was 102.6.

Despite the the slowdown in contract activity, NAR Chief Economist Lawrence
Yun said, “The modest decline in sales is not yet concerning, and contract
activity remains elevated, with the South and Midwest showing no measurable

Yun added that “higher mortgage interest rates and rising home prices are
impacting monthly contract activity in the high-cost regions of the Northeast
and the West.”

Yun also commented on inventory issues in the West saying “more homes
clearly need to be built in the West to to relieve price pressure, or the region
could soon face pronounced affordability problems.”

The pending home sales index is considered a leading indicator for
existing-home sales which the NAR is currently forecasting to increase 10% in
2013 to a seasonally adjusted annual rate of 5.2 million.

Regionally, the pending home sales index fell 6.5% in the Northeast and 1%
in the Midwest but rose 2.6% in the South. Pending home sales fell 4.9% in the

–MNI Washington Bureau; tel: +1 202-371-2121; email: