Contracts to buy existing U.S. homes fell in October 2018, according to new figures from one of America’s largest trade associations.
The National Association of Realtors’ Pending Home Sales Index data released on Nov. 29 shows the benchmark fell 2.6 percent last month to 102.1, down from 104.8 in September.
The index based on contract signings dropped 6.7 percent compared to the year 2017. The drop corresponds with an increase in mortgage rates. Higher mortgage rates have affected affordability, and lowered enthusiasm among prospective buyers.
Mortgage rates increased after the Federal Reserve decided to reduce the size of its balance sheet and raise the short-term interest rate for loans between banks.
According to mortgage loan company, Freddie Mac, the average rate for a 30-year mortgage was 4.81 percent in the week ending on Nov. 30, up from 3.9 percent in the previous year.
The drop in contract signings is most noteworthy, falling as much as 8.9 percent in the West, 1.8 percent in the Midwest, and 1.1 percent in the South.
Overall the index increase by 0.7 percent in the Northeast. Pending sales are a measure of home purchases that finalize a month or two later, suggesting sales will possibly decline throughout December.
The Associated Press contributed to this report.