WASHINGTON (Reuters) -Sales of previously owned U.S. homes increased solidly in August as lower mortgage rates pulled buyers back into the market, though a softening labor market could curb further gains.
The National Association of Realtors said on Monday pending home sales, based on signed contracts, rebounded 4.0% last month. Economists polled by Reuters had forecast contracts, which become sales after a month or two, rising 0.2%.
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Contracts increased in the densely populated South, Midwest and West, but declined in the Northeast.
Pending home sales advanced 3.8% from a year earlier.
“Lower mortgage rates are enabling more homebuyers to go under contract,” said Lawrence Yun, the NAR’s chief economist.
Mortgage rates declined in August as the Federal Reserve prepared to resume easing monetary policy. The U.S. central bank cut its benchmark overnight interest rate this month by 25 basis points to the 4.00%-4.25% range.
The rate on the popular 30-year mortgage is near an 11-month low, data from mortgage finance agency Freddie Mac showed.
But some of the stimulus from low mortgage rates could be offset by a weakening labor market. Job gains averaged only 29,000 jobs per month in the three months to August compared with 82,000 during the same period last year.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
