Pending home sales dipped 0.4% to an index reading of 110.9 in June, after a downwardly revised 5.8% rise to 111.3 in May, first reported as a 6.7% increase to 112.3, according to a report released Monday by the National Association of Realtors.
Economists polled by Thomson Reuters predicted that the index would be down 1.0%.
An index of 100 is equal to the average level of contract activity during 2001.
Year-over-year the pending homes sales index is up 10.9% from last June, when the index was 100.0.
Regionally, pending sales were mixed. The Northeast saw a flat reading at 87.2, while sales slipped 1.0% in the Midwest to 114.3. In the South, sales slid 2.1% to 118.3, and sales gained 3.3% to 114.2 in the West.
"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," NAR Chief Economist Lawrence Yun said. "The persistent lack of inventory also is contributing to lower contract signings."
Some homebuyers who choose floating-rate mortgages back away if rates rise too much, Yun said. This "apparently happened with some sales scheduled to close in June." Yun predicted, "Closed sales may edge down a bit in the months ahead, but they'll stay above year-ago levels."
