Americans back away from housing as pending home sales fall 1.4 per cent in August

WASHINGTON – Fewer Americans signed contracts to buy homes in August, as pending sales slumped amid broader concerns about the U.S. stock market and global economy.

The National Association of Realtors said Monday its seasonally adjusted pending home sales index fell 1.4 per cent to 109.4 last month. Signed contracts to purchase homes have climbed a healthy 6.1 per cent over the past 12 months, aided by steady job growth and low mortgage rates.

The August figured indicate that home sales lack the stamina to keep accelerating. Uncertainty in the financial markets and rising prices for homes are stirring doubts about affordability for many would-be buyers.

Employers have continued to hire at a steady rate in recent months, yet wage growth has been running below the increase in home prices.

The median home sales price has increased 4.7 per cent over the past year, more than double the increase in average hourly pay. And people who invested their down payments savings in stocks have suffered losses since August. The Standard & Poor’s 500 index has tumbled 9.2 per cent since the beginning of last month.

Pending sales are a barometer of future purchases. A lag of a month or two usually exists between a contract and a completed sale.

Fewer contracts were signed in the Northeast, Midwest and South in August, while the West experienced gains.

Completed sales of existing homes also tumbled in August. They dropped 4.8 per cent from the previous month to a seasonally adjusted annual rate of 5.31 million, the lowest level since April.