(MENAFN- AFP) US pending home sales slumped in May, taking a blow from a tight housing market and rising prices, the National Association of Realtors said Wednesday.
Pending home sales, a forward-looking indicator based on contract signings, had increased for three straight months before hitting the wall in May. Contract signings were lower in all four major regions of the country, NAR said.
Its pending home sales index tumbled 3.7 percent to 110.8 in May from a downwardly revised 115.0 in April.
The May level was still the third-highest reading in the past year, though year-over-year the index fell for the first time since August 2014.
"With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity," said NAR chief economist Lawrence Yun.
Yun said there was a growing chorus of complaints that buyers continue to be frustrated by the tense competition in a tight market and the lack of affordable homes for sale.
"Total housing inventory at the end of each month has remarkably decreased year-over-year now for an entire year," he said.
"There are simply not enough homes coming onto the market to catch up with demand and to keep prices more in line with inflation and wage growth."
Britain's shock decision last week to leave the European Union could alter the outlook for the US housing market in the second half of the year.
Mortgage rates, which have hovered around three-year lows for most of the year, could fall further amid short-term volatility in the financial markets from Brexit, Yun said.
There also could be higher demand from foreign buyers looking for a safer place to invest their cash.
"On the other hand, any prolonged market angst and further economic uncertainty overseas could negatively impact our economy and end up tempering the overall appetite for homebuying," Yun said.
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