WASHINGTON (Reuters) - Contracts to buy U.S. previously owned homes dropped for a third straight month in January amid record low inventory.
The National Association of Realtors (NAR) said on Friday its Pending Home Sales Index, based on signed contracts, declined 5.7% last month to 109.5. Pending home sales fell in the South, Northeast and Midwest, but rose in the West.
Economists polled by Reuters had forecast contracts, which become sales after a month or two, rebounding 1.0%. Pending home sales dropped 9.5% in January on a year-on-year basis.
An acute shortage of previously owned homes is hampering sales. Demand for housing could slow as mortgage rates increase, which together with high prices will further erode affordability, especially for first-time buyers. Mortgage rates are near three-year highs.
"With inventory at an all-time low, buyers are still having a difficult time finding a home," said NAR chief economist Lawrence Yun. "Given the situation in the market, mortgages, home costs and inventory, it would not be surprising to see a retreat in housing demand."