US pending home sales increase more than expected

[WASHINGTON] Contracts to buy previously owned homes increased more than expected in September, suggesting that the housing market was getting a lift from lower mortgage rates though tight supply remains a constraint.

The National Association of Realtors said on Tuesday its Pending Home Sales Index, based on contracts signed last month, advanced 1.5 per cent to a reading of 108.7.

Economists polled by Reuters had forecast pending home sales rising 0.9 per cent in September.

Pending home contracts become sales after a month or two, and last month's increase suggested a rebound in existing home sales, which declined 2.2 per cent in September. Pending home sales surged 3.9 per cent in September from a year ago.

A persistent shortage of homes for sale has constrained the housing market despite lower mortgage rates and a slowdown in prices. Builders continue to complain that a lack of land and labor is making it difficult to break more ground especially on homes priced below US$200,000, which are most sought after.

Investment in homebuilding has contracted for six straight quarters, the longest such stretch since the Great Recession.

REUTERS