US pending home sales drop in July

US pending home sales dropped for the second month in a row in July as rising mortgage interest rates hit demand, an industry group said Wednesday.
The National Association of Realtors' index for pending sales of previously owned homes, based on contract signings, fell 1.3 percent to 109.5 in July.
The index was 110.9 in June, after an unexpectedly strong jump to 112.3 in May, its highest level since December 2006.
The second straight monthly decline surprised analysts, who on average had predicted the index would rise 0.2 percent in July.
Although the housing market is still rising -- pending sales were up 6.7 percent from July 2012 -- higher mortgage rates are slowing the market, NAR said.
Lawrence Yun, NAR chief economist, downplayed the July figure, saying "the modest decline in sales is not yet concerning."
"However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West," he said.
The NAR data points to existing-home sales dipping in both August and September, said Ian Shepherdson of Pantheon Macroeconomics.
"Mortgage applications and mortgage lending are now trending downwards in the wake of the surge in mortgage rates over the past three months, and housing transactions will follow," he said.
"We are inclined to see the May surge as a signal that people were rushing to lock-in before rates rose further, rather than an indication of a further sustained pick-up in sales."