WASHINGTON, March 25 (Reuters) – Contracts for the purchase of existing homes in the United States fell for the fourth consecutive month in February, weighed down by persistent shortages of properties, and activity could remain weak amid rising prices. Mortgage interest rates and high housing prices.
The National Association of Realtors (NAR) said on Friday that its index of pending home sales, based on contracts signed, fell 4.1% last month to 104.9. Pending home sales decreased in the South, Midwest and West, but increased in the Northeast.
Economists polled by Reuters had expected contracts, which convert to sales after a month or two, to rise 1.0%. Pending home sales decreased and 5.4% in February in year-on-year terms.
Existing home sales fell in February but remained above their pre-pandemic level. Stocks of existing homes are at historic lows. Shortages and rising prices of materials have made it difficult for builders to ramp up construction, leading to double-digit growth in home prices.
Mortgage rates soared in February and have continued to rise after the Federal Reserve last week raised its policy rate by 25 basis points, the first in more than three years. They are likely to accelerate further, at a time when Fed Chairman Jerome Powell said Monday that the US central bank must move “quickly” to raise rates and possibly “more aggressively” to prevent the high inflation takes hold.
The 30-year fixed rate averaged 4.42% this week, the highest since January 2019, from 4.16% the previous week, data from mortgage finance agency Freddie Mac showed on Thursday.
According to the NAR, higher mortgage rates and sustained home price inflation had led to a 28% year-over-year jump in mortgage payments as of February.
“Rising home prices, combined with rising mortgage rates, can easily translate into another $200-300 in mortgage payments a month, putting a lot of pressure on many families already on a tight budget.” said NAR chief economist Lawrence Yun.
(Reporting by Lucia Mutikani; edited in Spanish by Benjamín Mejías Valencia)