Contracts to purchase previously owned U.S. homes rose less than forecast in November, indicating higher borrowing costs are holding back the recovery in residential real estate.
A gauge of pending home sales increased 0.2 percent, the first gain in six months, after a 1.2 percent drop in October that was larger than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent advance.
Higher mortgage rates, tight lending standards and price increases driven by a limited supply of homes for sale are discouraging prospective buyers. Further gains in hiring, household wealth andconsumer confidence would help boost the housing recovery and give greater momentum to the economy.
“The combination of bank reluctance to lend and the pop in mortgage rates did throw a monkey wrench in that sector,” Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado, said before the report. “We’re looking for a solid spring season, but you may not see the big climbs in price until March, April and May.” Estimates in the Bloomberg survey of 30 economists ranged from a decline of 1 percent to an advance of 5 percent.
