Sales, which are based on contract signings, dropped 2.6 percent to 106.3 in August from 109.1 in July, the fifth decline in six months, and the lowest reading since January 2016, the National Association of Realtors said on Wednesday.
Separately, the Mortgage Bankers Association (MBA) reported that its Market Composite Index, a measure of mortgage loan application volume, decreased 0.5 percent on a seasonally adjusted basis for the week ending September 22 from one week earlier.
NAR uses a large national sample of signed residential property sale contracts to build its monthly pending home sales index. "Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps made a decision to temporarily postpone their search".
The impact of limited inventory and the subsequent surge in housing prices that has scared away many would-be homebuyers is showing up in other housing-market data. He lowered his forecast for full-year existing home sales to 5.44 million, which is 0.2 percent below 2016's pace.
The Realtors group projects 5.44 million homes will be sold this year, down from last month's estimate of 5.49 million and lower than the 5.45 million sold in 2016.
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Northeast: The pending sales index declined 4.4 percent to 93.4 in July, 4.1 percent below a year ago.
Given the contraction and the likely slowing of activity in areas affected by Hurricanes Harvey and Irma, the NAR also said it now expects existing home sales this year to be below the 2016 level. "The good news is that almost all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9%".
Agents sold 11 new homes in August, three fewer than in July, and sold 270 existing homes, an increase of 252 in July.
Sales of previously owned homes fell in August to the lowest level in a year, declining 1.7% from a month earlier.
Pending home sales in the Midwest also dropped by 1.5%, while pending home sales in the West declined by 1.0%.