U.S. contracted sales fell 1.6% in August and the real estate market recovery seems to be blocked

U.S. signed sales dropped 1.6% in August and the real estate market recovery seems to be blocked. As rising interest rates and higher prices began to suppress demand, U.S. home buyers signed contracts for existing homes in August...

As rising interest rates and rising prices began to suppress demand, U.S. home buyers signed contracts for existing homes in August, down 1.6% from July. According to a report from the National Association of Realtors, the number of housing sales contracts in August was still up 5.8% compared with the same month last year.

Real estate developers warned earlier this month that a rise in August home sales - mostly signed in June and July - could be the last, as agents reported a sharp drop in buyer traffic in August. Sales signings typically take one to two months to close, so it signals a slowdown in real estate transactions this fall.

National Association of Realtors economist Lawrence Yun said the sharp rise in mortgage rates this spring prompted buyers to make hasty decisions, and the sales peak in six and a half years finally occurred last month. We expect lower existing home sales in the coming months, but a lower number of homes for sale in many markets will continue to drive home price growth in the coming months.

According to the house price index released by S&P/Case-Shiller this week, house prices in 20 major cities in the United States rose by 12% in July. While house price growth has slowed, that level of growth has made it more difficult for first-time buyers to enter the market.

Another report said new home sales rose in August from July, but the increase was the second-lowest in a year. Both the new and existing home markets are constrained by fewer listings and tighter credit.

Home sales contracts in the Northeast region increased by 4% in August compared with July, making it the only region in the United States where contract sales increased. The Midwest fell 1.4%, the South fell 3.5%, and the West fell 1.6%. Real estate developers predict that the number of existing home sales will reach 5.2 million units in 2013, an increase of 11% from last year; but they expect there may be no change next year.