Americans signed fewer contracts than forecast to purchase previously owned homes in August, showing the recovery in the housing market will be uneven.
The index of pending home resales dropped 2.6 percent after a revised 2.6 percent gain in July that was more than initially reported, figures from the National Association of Realtors showed today in Washington. The reading compared with a median forecast of a 0.3 percent gain in a Bloomberg survey of 40 economists.
Unemployment hovering above 8 percent since early 2009 and stricter credit access are limiting purchases, even as mortgage rates remain attractive. Federal Reserve policy makers have targeted the housing market with further accommodation measures in order to spur growth and reduce unemployment.
“It’s going to be really difficult for housing to gain much momentum here if the employment backdrop doesn’t cooperate, and that’s exactly what’s happening,” Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC in New York, said before the report. Limited labor market progress and tight lending standards also “will ultimately conspire to put a low ceiling on home sales,” he said.
Estimates in the Bloomberg survey ranged from a decline of 2.3 percent to a rise of 3 percent. July signings were originally reported as a 2.4 percent increase from the prior month.
Among other reports today, orders for durable goods slumped 13 percent, the most since January 2009, paced by a plunge in demand for civilian aircraft. Bookings for non-defense capital equipment excluding planes, a proxy for business investment, rose 1.1 percent after decreases of 5.2 percent in July and 2.7 percent in June, according to the Commerce Department.
The economy in the second quarter grew at a 1.3 percent annual rate, revised from a previous estimate of 1.7 percent, reflecting smaller gains in consumer spending and farm inventories. Household purchases increased at the weakest pace in a year, the Commerce Department’s data showed.
Three of four regions showed a decrease in pending sales, according to today’s report from the real-estate agents’ group. That included a 7.2 percent drop in the West, a 2.6 percent decrease in the Midwest and a 1.1 percent fall in the South. They climbed 0.9 percent in the Northeast.
Compared with a year earlier, the index increased 9.6 percent after a 15.2 percent gain in the prior 12-month period.