(CN) — Fewer people signed contracts to purchase new homes in October as higher mortgage rates continued to put the cost of such an investment out of reach of many would-be buyers.
The National Association of Realtors said Thursday its pending home sales index fell 2.6 percent last month to 102.1.
The index based on contract signings has tumbled 6.7 percent from a year ago, the industry association said.
Contract signings dropped most sharply in the West, but they also declined in the Midwest and South. The index increased in the Northeast.
The housing downturn has corresponded with a jump in mortgage rates that began last year after President Donald Trump’s tax cuts led to higher budget deficits and interest rates charged on U.S. Treasury notes.
In a separate report Thursday, Mortgage giant Freddie Mac said the home borrowing rates remain much higher than they were a year ago.
Further fueling the increase mortgage rates was a decision by the Federal Reserve to reduce the size of its balance sheet and raise a short-term rate for loans between banks
The average rate on the benchmark 30-year, fixed-rate mortgage in now 4.81 percent. That compares with 3.90 percent a year ago.
The rate on 15-year fixed-rate loans edged up this week to 4.25 percent compared to 4.24 percent last week.
Pending sales are a barometer of home purchases that are completed a month or two later, so the October index suggests that sales will possibly decline through December.