A gauge of pending U.S. previously owned home sales unexpectedly rose in September but remained near the lowest level on record with affordability constraints and high borrowing costs keeping demand limited.
The National Association of Realtors' index of contract signings increased 1.1% from a month earlier to 72.6, the group reported Thursday. In August, the gauge matched the lowest level in data back to 2001.
The median estimate in a Bloomberg survey of economists called for a 2% drop in September.
"Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years," Lawrence Yun, NAR's chief economist, said in a statement. "Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated."
The figures show the market for existing homes continues to struggle to find its footing. A surge in mortgage rates to around 8% is making it more difficult to finance home purchases. Moreover, many homeowners who locked in much lower borrowing costs in the past are hesitant to list their homes, suppressing inventory and keeping asking prices elevated.
As a result, buyers are now coping with record-low affordability, a scenario that is likely to persist in the near future as Federal Reserve officials reaffirm they will keep interest rates elevated for a long period as the economy stays resilient.
Compared with a year earlier, pending home sales were down more than 13% on an unadjusted basis.
The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they're sold.
The South, Midwest and Northeast posted increases in September pending home sales. Contract signings in the West, meantime, fell to a fresh record low.
