Fewer Americans signed contracts to buy existing homes last month, likely because they can't find or afford what they want.
Figures released Wednesday by the National Association of Realtors revealed pending home sales index dropped 0.8% month-to-month and is now 1.7% lower than May 2016. Expectations had been for a slight gain, but even April's reading was revised lower.
The number of home sales that closed this spring in the States was slightly higher than a year ago, but market watchers say the lack of listings clearly held the market back, citing the fact that the supply of homes for sale at the end of May was down more than 8% from a year ago, and homes that were listed sold at the fastest rate on record.
The tight supply is pushing U.S. home prices higher, considerably faster than income growth. Low mortgage rates have not been much help in offsetting these big price gains, and in fact may be exacerbating the problem, especially if rates begin to rise as is widely expected.
Inventory appears worst on the low end of the market, where demand is highest. Real-estate publications say the number of starter and trade-up homes currently on the market is down 15.6% and 13% respectively, compared to a year ago. The inventory of premium homes has fallen 3.9%.
