US pending home sales fell by more than expected in July, according to data from the National Association of Realtors (NAR).
The pending home sales index fell by 1.3 per cent from the month before to 109.5 - the biggest fall this year. This follows a 0.4 per cent drop in the month to June. Analysts had expected to see a 0.2 per cent increase.
Year-on-year, the index is up 6.7 per cent. Pending sales have remained above year-ago levels for the last 27 months.
Lawrence Yun, NAR chief economist, said there is an uneven pattern around the country.
The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown.
However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the Wesy.
More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems.
NAR forecasts existing home sales to increase by ten per cent for the whole of 2013 - totaling around 5.1m. Sales are expected to reach 5.2m in 2014. A supply shortage means existing home prices are expected to rise nearly 11 per cent this year and five to six per cent in 2014.