U.S. pending home sales fell 2.6 percent in October when compared to September amid recent rise in mortgage rates, the National Association of Realtors (NAR) said on Thursday.
The pending home sales index, a forward-looking indicator based on contract signings, decreased to 102.1 in October from 104.8 in September, while the year-over-year contract signings dropped 6.7 percent, making this the tenth straight month of annual decreases.
"The recent rise in mortgage rates have reduced the pool of eligible home buyers," said Lawrence Yun, NAR's chief economist.
Yun likened the current situation to that of 2013 and 2014, when interest rates jumped from 3.5 percent to 4.5 percent. But he feared that this time, interests rates could rise even further.
Still, "the mortgage rates are much lower today compared to earlier this century, when mortgage rates averaged 8 percent. Additionally, there are more jobs today than there were two decades ago," Yun added.
The NAR's chief economist expects the existing-home sales this year to decrease 3.1 percent to 5.34 million, and the national median existing-home price to increase 4.7 percent.
The pending home sales index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.