Signed contracts to buy homes plunged in Sept.

Associated Press

WASHINGTON

The number of Americans who signed contracts to buy existing homes fell in September to the lowest level in nine months. The decline reflects higher mortgage rates and home prices that have made purchases more costly.

The National Association of Realtors said Monday that its seasonally adjusted pending home-sales index dropped 5.6 percent last month from August to a reading of 101.6. That also pushed the index below its year-ago level, the first time that’s happened in nearly 21/2 years.

There generally is a one- to two-month lag between a signed contract and a completed sale. The drop suggests final sales will decline in the coming months.

Contracts to buy homes have slowed in recent months as mortgage rates reached a two-year high over the summer. Rates rose in response to speculation that the Federal Reserve would reduce its stimulus later this year.

But the Fed held off taking any action during its meeting in mid-September, and rates have fallen since then.