WASHINGTON The number of Americans who signed contracts to buy homes fell for the third consecutive month in September after the spring-and-summer peak buying season failed to entice new buyers.
The National Association of Realtors said its index of sales agreements fell 4.6 percent last month to a reading of 84.5.
A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.
Contract signings are usually a reliable indicator of where the housing market is headed. Theres typically a one- to two-month lag between a contract and a completed deal.
But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed that the homes were worth less than the buyers had bid. A sale isnt final until a mortgage is closed. That means more pending sales arent turning into final sales.
It is especially troubling given the big August decline in long-term interest rates, said Pierre Ellis, an analyst at Decision Economics.
Homes are the most affordable theyve been in decades. Long-term mortgage rates are hovering at record lows near 4 percent. Prices in some metro areas have been cut in half. Still, sales in most areas remain weak.
In part, thats because loans are harder to get. Many lenders are requiring 20 percent down payments and strong credit scores to qualify.
Sales for previously occupied homes are on pace to match last years 4.91 million sold, the fewest since 1997. In a healthy economy, Americans would buy roughly 6 million homes each year.
In September, sales of new homes rose after four consecutive monthly declines. But that was largely because builders had cut their prices in the face of depressed demand. This year is shaping up as the worst for new-home sales on records dating to 1963.
The number of people who signed home contracts had risen in both May and June before falling 7 percent over the past three months.
Contract signings fell across the country. Septembers index fell 2.1 percent in the West, 4.7 percent in the Northeast, 5.5 percent in the South and 6.2 percent in the Midwest.
Home prices rose in August in half of major cities measured by a private survey, a sign that prices are stabilizing in some hard-hit portions of the country.
The Standard & Poors/Case-Shiller index, released earlier this week, showed prices increased in August compared with July in 10 of the 20 cities tracked. That marked the fifth consecutive month that at least half of the cities in the survey showed monthly gains.
The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.
The August data provides a modest glimmer of hope that some areas may have bottomed out and could be turning around, said David M. Blitzer, chairman of S&Ps index committee. He noted that cities in the Midwest Chicago, Detroit and Minneapolis have shown some strength since May.
Still, Robert Shiller, the co-founder of the index and a Yale economics professor, said in an interview on CNBC that overall home prices were flat and a recovery in the struggling housing market was not on the horizon.
Over the past 12 months, prices have fallen in all but two cities. Detroit and Washington were the only two cities to show year-over-year gains.
The index, which covers half of all U.S. homes, measures prices compared with those in January 2000 and creates a three-month moving average. The August data are the latest available.