Higher rates, home prices cut into July sales, NAR says

REAL ESTATE WATCH

September 04, 2005|By Bloomberg News

Contracts to purchase previously owned U.S. homes fell in July as higher borrowing costs and record prices pushed some prospective homebuyers out of the market.

The index of signed purchase agreements, or pending home resales, fell 1.0 percent to 125.1, the National Association of Realtors said Thursday. The June index, which rose 0.6 percent, was revised to 126.4 from 126.3. The index has a base value of 100, which represents the 2001 average for pending home sales.

The NAR said higher rates and record prices made homes more expensive in July. Borrowing costs receded in August in response to record oil prices, suggesting that housing will continue to underpin economic growth in the third quarter.

Housing activity tends to accelerate in response to lower 30-year fixed mortgage rates. Sales of new and previously owned homes are both on pace for a fifth record year.

- Bloomberg News

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