WASHINGTON – Fewer Americans than forecast signed contracts to buy previously owned homes in June, a sign residential real estate is struggling to strengthen.
The index of pending home sales declined 1.1 percent from the month before after rising 6 percent in May, figures from the National Association of Realtors showed Monday in Washington. The median forecast of 39 economists surveyed by Bloomberg projected sales would rise 0.5 percent.
Limited availability of credit and sluggish wage growth are making it harder for prospective buyers to take the plunge, threatening to throttle the pace of the housing recovery. Continued gains in employment and a bigger supply of available homes will be needed to help accelerate the industry’s progress, which Federal Reserve Chair Janet Yellen has said is lackluster.
“Unfortunately, I don’t see much of an acceleration in housing demand going forward until we get a significant improvement in the labor market and the income part of it in particular,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who forecast a 1 percent decrease in pending sales. “An uneven recovery in the housing market is really one of the biggest concerns of the Fed.”
Stocks dropped as industrial shares sank and investors watched crises overseas before a Federal Reserve policy decision this week. The Standard & Poor’s 500 Index fell 0.5 percent to 1,968.1 at 10:20 a.m. in New York. The S&P 500 Supercomposite Homebuilding Index declined 1.8 percent.
Estimates in the Bloomberg survey of economists ranged from a decline of 3.1 percent to an increase of 3.5 percent. The May reading was revised from a previously reported 6.1 percent gain.
Purchases were down 4.5 percent from the year prior, on an unadjusted basis, after a 6.9 percent decrease in the 12 months that ended in May, the association reported.
While housing has recovered from its lows, “activity leveled off in the wake of last year’s increase in mortgage rates, and readings this year have, overall, continued to be disappointing,” Yellen said earlier this month during her semi-annual testimony to the Senate Banking Committee.