Signed contracts to buy US homes down for 8 straight months; home sales slower than in 2013

Photo: The Canadian Press. All rights reserved.

This Friday, March 21, 2014 photo shows a home for sale in Cleveland Heights, Ohio. The National Association of Realtors releases pending home sales index for February, on Thursday, March, 27, 2014. (AP Photo/Tony Dejak)

WASHINGTON - The number of Americans who signed contracts to buy homes fell for the eighth straight month in February, a sign that real estate sales will likely slow over the next few months.

The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index dropped 0.8 per cent to 93.9. The index has fallen 10.5 per cent over the past 12 months.

Pending sales are a barometer of future purchases: A one- to two-month lag usually exists between a signed contract and a completed sale.

Higher mortgage rates, rising prices and a limited supply of homes have slowed sales since the index peaked in June. Snowstorms appear to have crimped purchases in the Northeast during February.

Most economists expect sales to rebound as the weather improves and the spring buying season begins. But 2014 has started at a far weaker pace than last year. The higher prices and loan rates appear to have made homes unaffordable for some would-be buyers.

The Realtors said last week that sales declined 0.4 per cent in February to a seasonally adjusted annual rate of 4.6 million. It was the sixth decline in seven months. The trade group forecasts that sales will slip to 5 million this year from 5.1 million in 2013.

An index that tracks mortgage applications fell last month to its lowest level since December 2000. The Mortgage Bankers Association said its seasonally adjusted index of refinancing and home-buying demand dropped 8.5 per cent in the week that ended Feb. 21.

The National Association of Home Builders/Wells Fargo builder sentiment index was 46 in February. Readings below 50 indicate that more builders view sales conditions as poor rather than good.

And sales of new homes declined 3.3 per cent last month to a seasonally adjusted annual rate of 440,000, the Commerce Department said Tuesday.

The steep discounts on home prices that followed the Great Recession have largely disappeared. The Standard & Poor's/Case-Shiller 20-city home price index said Tuesday that prices rose a strong 13.2 per cent in January compared with 12 months earlier.

And the average rate on a 30-year fixed mortgage was 4.4 per cent this week, nearly a full percentage point more than it was a year ago.