The numbers: Pending home sales fell 1.9% in June, the National Association for Realtors said Thursday. Economists polled by the Wall Street Journal had projected a 0.5% gain.

This is only a slight pullback from the surge in sales in May, which were revised up to a gain of 8.3% from the initial estimate of 8%.

Compared with a year ago, pending home sales were up 1.9%.

What happened: In June, pending sales were up 0.6% in the Midwest and 0.5% in the Northeast. They declined 3.8% in the West and 3% in the South.

The big picture: Contract signings usually precede closings by about 45 days, so the pending-home-sales release is considered a leading indicator for the existing-home-sales report.

The housing sector is cooling after a strong performance in the past few quarters. Record high prices are dampening demand.

The Federal Reserve on Wednesday laid the groundwork for starting to taper its bond-buying program. Many analysts expect interest rates to rise somewhat as a result later this year.

For now, interest rates
TMUBMUSD10Y,
1.271%

remain low and mortgage applications jumped last week as a result. But that was due to refinancing activity as purchase applications declined.

What the NAR said: “Pending home sales have seesawed since January, indicating a turning point for the market,” said Lawrence Yun, NAR’s chief economist. The pending home index was 112.8 in June. It was 126.4 in December.

Market reaction: Stocks
DJIA,
+0.43%

SPX,
+0.47%

were higher in early trading on Thursday on a strong GDP report for the second quarter.

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