Fewer Americans than forecast signed contracts to buy previously owned homes in July, a sign that slowing demand will keep adding to the glut of unsold properties.
The index of pending home resales fell 3.2% after a revised 5.8% gain in June, the National Association of Realtors said Tuesday. The monthly decline was the fourth this year as tighter credit conditions kept would-be buyers from taking advantage of lower prices.
The rate on 30-year, fixed-rate mortgages averaged 6.29% in July, up from the average of 5.81% in the first half. The federal government's weekend takeover of Fannie Mae and Freddie Mac, which own or guarantee nearly half of U.S. home loans, aims to ensure that mortgage funds remain available and to minimize further declines in the housing market.
The average rate for a 30-year fixed mortgage was 6.08% Monday, down from 6.26% last week, according to Bankrate Inc., a research firm in North Palm Beach, Fla.
"Both the pricing and availability of mortgages remain very restrictive and are major impediments to a rebound in sales," said Richard DeKaser, the chief economist at National City Corp. in Cleveland.
Economists had estimated the resale index would fall 1.5%, according to the median of 39 forecasts in a Bloomberg News survey. The estimates ranged from a drop of 3.5% to a 2% gain.
Pending resales were down 6.8% from July 2007, Tuesday's report showed. Resales fell the most in the West, where they were off 10.6% from June. They dropped 7.5% in the Northeast but were unchanged in the South.
Pending resales rose 2.8% in the Midwest.
Compared with a year earlier, pending resales were down in all regions except the West.
The report is considered a leading indicator because it tracks contract signings. Closings, which typically occur a month or two later, are tallied in a separate report from the Realtors association.
The group's figures on August existing-home sales are due Sept. 24.
Home-sale closings rose 3.1% in July, to a 5 million annual pace, with at least one-third of the purchases coming on foreclosed properties, from a 4.85 million rate the prior month. At the July sales rate, it would take 11.2 months to sell all the houses on the market, about twice the inventory of a balanced market, according to the agents' group.
Other measures also show how bank seizures may push down home prices and suppress sales. Foreclosures rose to their fastest pace in almost three decades during the second quarter, the Mortgage Bankers Association in Washington said in a report last week.
Home prices in 20 U.S. metropolitan areas fell in June by 15.9% from a year earlier, the biggest drop ever, the S&P/Case-Shiller home-price index showed on Aug. 26.
Home builders are struggling to maintain profits as they compete with a glut of unsold properties. Toll Brothers Inc., the largest U.S. luxury home builder, reported its fourth straight quarterly loss last week. "Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers' market," Toll Brothers' chief executive, Robert Toll, told analysts Sept. 4.