Home signings off 4.9% in December

WASHINGTON — Americans pulled back substantially on signing contracts to buy homes in December, as wouldbe buyers face prices that are rising faster than incomes.

The National Association of Realtors said Wednesday that its pending home sales index, which measures the numbers of purchase contracts signed, fell 4.9% last month to 103.2. Still, lower mortgage rates mean that contract signings were up 4.6% from December 2018.

The average rate on a 30-year mortgage was 3.65% last week, down from 4.45% a year ago, according to mortgage buyer Freddie Mac. Lower borrowing costs helped boost demand for housing last year, but that led to higher prices by the end of 2019 that could weigh on affordability going forward.

Pending home sales are often looked to as a leading indicator of existing-home purchases and a measure of the health of the housing market in the coming months.

“Due to the shortage of affordable homes, home sales growth will only rise by around 3%,” Lawrence Yun, chief economist at the association, said in a statement, adding that mortgage rates will probably hold below 4% for most of the year.

Contract signings fell in all U.S. regions, led by a 5.5% decline in the South and a 5.4% decrease in the West.

The pending home-sales index stands at the lowest level since February.

A separate report Wednesday showed a gauge of loan applications to buy homes increased to an 11-year high.