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Surprise fall in US pending home sales

Contracts to buy previously-owned US homes unexpectedly fell in June, casting a cloud over the housing market recovery.

The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.1 per cent to 102.7.

The decline, which confounded economists’ expectations for a 0.5 per cent gain, followed three straight months of increases. Pending home sales, which lead sales by a month or two, increased six per cent in May. Contracts fell in the Northeast and the South, but rose in the West and the Midwest.

Meanwhile, a survey by financial data firm Markit showed the country’s services sector accelerating at the highest level for four and a half years. The firm’s preliminary services Purchasing Managers Index in July was 61.0, unchanged from June. A reading above 50 indicates expansion in economic activity, while a ready below signals contraction. The June reading of 61.0 was the highest for the survey, which began in October 2009.

However, the employment index dipped from 56.1 — a record — to 52.8.

Chris Williamson, chief economist at Markit, told Reuters: “While a cyclical upswing appears underway across the service sector, the latest survey provides some indication that a smoother ride is not yet fully entrenched.”