Pending home sales in the U.S. decreased in June, after reaching a six-year-high in May, according to the National Association of Realtors.
The Pending Home Sales Index, based on contract signings and not closings, slipped 0.4 percent to 110.0 in June, affected by higher home prices and interest rates, NAR reports.
"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," Lawrence Yun, NAR chief economist, said in a release. "The persistent lack of inventory also is contributing to lower contract signings."
However, the forward-looking indicator has been above year-ago levels for the past 26 months. The June number is 10.9 percent higher than last year, NAR said.
The index is a weak barometer for the housing market as not all contracts go to closing. If mortgage rates rise too much, homebuyers may change their mind, which apparently happened with sales scheduled to close in June, NAR said.
"Closed sales may edge down a bit in the months ahead, but they'll stay above year-ago levels," Mr. Yun said.
NAR expects existing-home sales to increase more than eight percent in 2013 with an almost 11 percent increase for the median price.
Pending Home Sales Index by region:
The PHSI in the Northeast was unchanged at 87.2 in June but is 12.2 percent higher than a year ago.
In the Midwest the index slipped 1.0 percent to 114.3 in June but is 19.5 percent above June 2012.
Pending home sales in the South fell 2.1 percent to 118.3 in June but are 9.5 percent higher than a year ago.
The index in the West increased 3.3 percent in June to 114.2, and is 4.4 percent above June 2012.