By Ben Leubsdorf
A gauge of upcoming home sales dropped in November, a sign of weakening momentum for the U.S. housing market headed into 2017.
The National Association of Realtors said Wednesday that its pending home sales index, which tracks contracts signed for purchases of existing homes, fell 2.5% from October to a seasonally adjusted 107.3 last month. Sales typically close within a month or two of signing.
"This was a disappointment relative to expectations for an increase during the month and a more downbeat signal on housing activity than the move up in mortgage purchase application volumes that also occurred in November," J.P. Morgan Chase economist Daniel Silver said in a note to clients.
Economists surveyed by The Wall Street Journal had expected a 0.5% rise in November. Instead, the index fell to its lowest level since January. Compared with November 2015, the index was down 0.4% last month.
Lawrence Yun, the trade group's chief economist, blamed the decline on a recent jump in mortgage rates combined with rising prices and tight inventory.
"Already faced with climbing home prices and minimal listings in the affordable price range, fewer home shoppers in most of the country were successfully able to sign a contract," he said.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
Sales of previously owned homes account for roughly 90% of U.S. home purchases. The Realtors group last week reported that existing-home sales rose 0.7% in November from the prior month to a seasonally adjusted annual rate of 5.61 million. That was the third consecutive monthly increase and the strongest sales pace since February 2007.
But the supply of available homes remained tight last month, pushing up prices, and mortgage rates are rising from the ultralow levels of recent years -- forces that could weigh on the housing market in the new year. Mr. Yun last week had said he expected "some tapering off" for sales in 2017.
The average interest rate on a 30-year fixed-rate mortgage in November was 3.77%, up from 3.47% the prior month, and rates have climbed further in December, according to Freddie Mac.
Write to Ben Leubsdorf at email@example.com
(END) Dow Jones Newswires
December 28, 2016 11:18 ET (16:18 GMT)
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