WASHINGTON (Reuters) - Contracts to buy U.S. previously owned homes fell for a fourth straight month in September as the housing market continued to buckle under the strain of higher mortgage rates.
The National Association of Realtors (NAR) said on Friday its Pending Home Sales Index, based on signed contracts, dropped 10.2% to 79.5 last month. Contracts fell in all four regions.
Economists polled by Reuters had forecast contracts, which become sales after a month or two, would drop 5.0%. Pending home sales plunged 31.0% in September on a year-on-year basis.
The decline in signed contracts suggested that existing home sales would continue to fall after posting their eighth straight monthly decrease in September.
The housing market has been the sector hardest hit by the Federal Reserve's aggressive interest rate hikes. The U.S. central bank is tightening monetary policy to dampen overall demand in the economy, with annual inflation having risen at its fastest pace in 40 years.
The Fed has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, the steepest pace of policy tightening in a generation or more.
With further policy tightening expected, mortgage rates have soared. The 30-year fixed mortgage rate averaged 7.08% this week, breaking above 7.0% for the first time since April 2002, according to data from mortgage finance agency Freddie Mac (OTC:FMCC).
Residential investment contracted for a sixth straight quarter in the third quarter, the longest such stretch since the housing market collapse in 2006, the government reported on Thursday.