Contract signings hit nine-month low

Pending home sales hit a nine-month low in September as mortgage rates and housing prices ticked up, slowing demand.

The National Association of Realtors said Monday that contract signings fell 5.6 percent to 101.6 last month, down for the fourth straight month, dropping to the lowest level since December. 

"Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity," said Lawrence Yun, NAR chief economist. 

"In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases."

The index dropped below its year-ago level for the first time in 29 months. 

"This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014," Yun said. 

"Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year."

The report indicates that sales could drop in the next few months. 

Prices were up 12.4 percent in August year-over-year, CoreLogic reported recently.

Mortgage rates, which are hovering near historic lows, rose about a point over the summer but have tempered in the past month.

The average rate for a 30-year mortgage was 4.13 percent last week, according to Freddie Mac.

There is usually a gap of a couple of months between contract signings and closings. 

Still, despite rising rates and prices, economists expect the housing recovery to chug along at a good clip. 

Contract signings fell in all four regions, too. 

The index in the Northeast dropped 9.6 percent and is 6.4 percent below a year ago. 

In the Midwest, the index fell 8.3 percent but is 5.7 percent higher than September 2012. 

Sales in the South slipped 0.4 percent to 116.2 but are 2 percent higher than a year ago. 

The index in the West dropped 9 percent in September to 97.3, and is 9.8 percent lower than the same month last year.