Pending home sales in the U.S unexpectedly took a hit in June, falling 1.1 percent to 102.7 from May's 103.8, according to the National Association of Realtors (NAR) Pending Home sales Index.
Pending home sales didn't just decline on a month-on-month basis but are also down 7.3 percent from the previous year's, at the same time. The index declined the highest in the Northeastern states - 2.9 percent to 83.8 in June. In the South, home sales dipped 2.4 percent. The index, however, rose slightly in the Midwest and the West by 1.1 and 0.2 percent, respectively.
Experts at NAR attribute the decline in the sales to a flat wage report, tighter lending and the supply crunch, which despite improvement in the recent few months, has been scanty. The association predicts that pending home sales will be down 2.8 percent, this year.
However, it expects better reports in the coming few months as price increases have been minimal and rents have been rising at a faster pace.
"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," Lawrence Yun, chief economist at NAR, said in a statement.
"The good news is that price appreciation has decreased to its slowest pace since March 20121 behind much needed increases in inventory. With rents rising 4 percent annually, potential buyers are less likely to experience sticker shock and can make smart decisions on whether or not it makes sense to buy or continue renting," he added.
The pending home sales report comes just a few days after Freddie Mac released its monthly Multi Indicator Market Index (MiMi), which found several housing markets in the country "stalling." The government-backed lending giant is calling the freeze "stability."
Indeed, the housing market has shown signs of growth after a four-month lull in the beginning of 2014. While the spring home-buying season didn't see much activity, performance was better in the summer.
U.S. existing home sales picked up in June on a stronger hiring drive, but the full potential of the market wasn't utilized as wages have still been relatively flat.
Experts say that the housing growth needs to speed up to bolster the U.S. economy.
"The lack of income growth with potential first-time buyers is problematic," Ryan Sweet, senior economist at Moody's Analytics in West Chester, Penn., told Reuters.
"But this should take a turn for the better next year with faster wage growth and looser credits. If housing doesn't reaccelerate, the economy won't grow faster" he added.