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Sep 29, 10:14 AM EDT

Fewer Americans signed contracts to buy homes in August, as a shortage of properties for sale is weighing on the market

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AP Photo/Wilfredo Lee

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WASHINGTON (AP) -- Fewer Americans signed contracts to buy homes in August, as a shortage of properties for sale is weighing on the market.

The National Association of Realtors said Thursday its seasonally adjusted pending home sales index fell 2.4 percent last month to 108.5, its lowest reading since January. The number of signed contracts slumped sharply in the South, the nation's largest housing market. But pending sales improved in the Northeast, Midwest and West.

Home purchases and prices have risen much of this year but a slowdown surfaced in August as a lack of inventory has hurt the market. Would-be buyers are confronting increasingly limited choices and rising prices, offsetting the benefits of low mortgage rates.

Pending sales contracts are a barometer of future purchases - a sign that sales levels might fall in the coming months. A sale is typically completed a month or two after a contract is signed.

Completed sales dipped 0.9 percent last month to a seasonally adjusted annual rate of 5.33 million, the Realtors said last week. Still, home sales up 3 percent so far this year.

But increased demand has drained the market of sales listings.

Inventory has plummeted 10.1 percent from a year ago to 2.04 million homes. This shortage has prompted sales prices to climb at a 5.1 percent annual clip to a median of $240,200 in August.

Affordability is emerging as a major obstacle despite low 30-year mortgage rates averaging less than 4 percent.

A stunning 24 percent of county housing markets are unaffordable, meaning that there is a historically high median cost of buying relative to average wages, according to a new report by ATTOM Data Solutions, a housing data provider. That figure is up from 19 percent a year ago.

The markets with problematically high prices relative to historic averages include Houston, Brooklyn, Dallas and San Antonio.

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