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A forward-looking indicator of US home sales unexpectedly dropped last month as leaner inventory and higher home prices and mortgage rates kept home buyers at bay.

Pending home sales, or signed contracts to buy previously-owned homes, fell 2.8 per cent in January from the previous month, when it rose 0.8 per cent, the National Association of Realtors said on Monday.

A regional breakdown showed that pending home sales rose in the Northeast and South but declined in the Midwest and the West.

Jobs growth, wage gains and record highs in the US stock market have seen interest in buying a home rise to record highs but a run up in home prices and leave inventories have hamstrung buyers.

“January’s accelerated price appreciation 2 is concerning because it’s over double the pace of income growth and mortgage rates are up considerably from six months ago,” said chief economist Lawrence Yun. “Especially in the most expensive markets, prospective buyers will feel this squeeze to their budget and will likely have to come up with additional savings or compromise on home size or location.”

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