U.S. PENDING HOME SALES FALL 5.2%, BIGGEST DROP SINCE SEPT.

U.S. pending home sales fell last month by the most since September, suggesting the housing market isn’t totally out of the woods yet.

The National Association of Realtors’ index of contract signings to purchase previously owned homes dropped 5.2 percent in March to 78.9, according to data released Thursday. The decrease was worse than all estimates in a Bloomberg survey of economists, which called for a 0.8 percent advance.

The pending home sales report is often seen as a leading indicator of existing-home sales, given homes typically go under contract a month or two before they’re sold. That said, homeowners who locked in low mortgage rates are reticent to list their properties, keeping supply of pre-owned homes constrained.

“The lack of housing inventory is a major constraint to rising sales,” Lawrence Yun, NAR’s chief economist, said in a statement. “Limited housing supply is simply not meeting demand nationally.”

Still, there have been some encouraging signs of stabilizing in recent months. Newhome sales are rising and mortgage rates have eased somewhat, which is propping up home builder sentiment.

Looking ahead, borrowing costs are still elevated and will likely stay that way for some time as the Federal Reserve is poised to hike interest rates again next week before what’s anticipated to be an extended pause.

Sales fell in three of four regions on a monthly basis, while the South eked out a small advance. From a year ago, contract signings fell 23.3 percent on an unadjusted basis.