Investing.com - Pending home sales in the U.S. unexpectedly fell in August to its lowest level since the beginning of the year, dampening optimism over the health of the housing sector, industry data showed on Thursday.
In a report, the National Association of Realtors (NAR) said its pending home sales index fell by a seasonally adjusted 2.4% last month, missing expectations for an increase of 0.3%.
The index reading at 108.5 is the second lowest this year after January’s 105.4.
Year-on-year, pending home sales decreased at an annualized rate of 0.2%, compared to the 2.2% decline in the previous month.
Furthermore, July’s month-on-month reading was revised down to a 1.2%, compared to the initial reading of a 1.3% advance.
Additionally, the report showed that existing home prices had risen 5.1% year-on-year in August, its 54th consecutive increase.
NAR chief economist Larry Yun said suffering supply levels have taken the wind out of the momentum the housing market experienced earlier this year.
"Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract," he said.
"In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings," Yun explained.
According to Yun, evidence is piling up that without more new home construction the current housing recovery could stall.
"There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers," Yun warned.
Following last month's decline, Yun expects existing-home sales in 2016 to be around 5.36 million, a 2.1% increase from 2015 and the highest annual pace since 2006 (6.48 million).
The national median existing-home price growth is forecast this year to rise around 4%.
After the report, EUR/USD was trading at 1.1222 from around 1.1212 ahead of the release of the data, GBP/USD was at 1.2994 from 1.2995 earlier, while USD/JPY was at 101.53 from 101.59 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 95.44 from 95.49 previously.
Meanwhile, U.S. stock markets were trading slightly lower after the open. The Dow 30 slipped 0.02%, the S&P 500 inched down 0.12%, while the Nasdaq Composite fell 0.38%.
Elsewhere, in the commodities market, gold futures traded at $1,324.35 a troy ounce, compared to $1,322.85 ahead of the data, while crude oil traded at $47.31 a barrel from $47.14 earlier.