WASHINGTON, June 29 (UPI) -- Pending home sales were down 3.7 percent in May, marking the first annual drop in two years.
Figures released by the National Association of Realtors show a slowdown in the U.S housing market ahead of the summer months.
Economists had expected a more modest decline of 2 percent, The Wall Street Journal reported.
The pending home sales index tracks when contracts have been signed for purchases of previously owned homes.
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But experts say that the dip could be blamed on a shortage of homes available for sale because of strong sales activity in previous months.
"With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity," explained Lawrence Yun, chief economist for the Realtors.
"Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market."
In some parts of the country, home prices have been increasing faster than expected. The most buoyant metropolitan markets are Denver, Dallas, Portland, Oregon, San Francisco, Seattle, Charlotte, and Boston, according to the latest report from S&P/Case-Shiller.
Homes are also spending far less time on the market, averaging 30 days in May, compared to 40 days a year ago.
While mortgage rates have remained low, applications for a mortgage to purchase a home are down 5 percent in the past month, according to the Mortgage Bankers Association. Rates fell further this week, as a result of the Brexit vote.
