WASHINGTON (Reuters] – In February, contracts to purchase U.S. homes that were previously owned fell for the fourth month. The problem was caused by a shortage of properties. Activity could also remain slow due to rising house prices and mortgage rates.

On Friday, the National Association of Realtors (NAR), reported that its Pending Home Sales Index was down 4.1% to 104.9. It is based upon signed contracts. While the Northeast experienced a rise in Pending Home Sales, they declined in the Midwest, South, and West.

Reuters polled economic experts to forecast that contracts would turn into sales in a matter of months. However, the rebound was 1.0% according to Reuters. On a year-on, basis, Pending Home Sales decreased by 5.4% in February.

Although sales of homes that were previously owned fell in February, they remained well above pre-pandemic levels. Record low inventory levels are being recorded for used homes. Due to shortages and high-priced building materials, it has been difficult for builders to increase construction. This has led to double-digit increases in house prices.

The Federal Reserve increased its policy interest rates by 25 basis point last week. This was their first major hike in three years. Mortgage rates soared after February. The rate of rise is likely to keep going up as Fed Chair Jerome Powell stated Monday that the U.S. central banks must “expeditiously” raise interest rates, and potentially “more aggressively”, to stop high inflation from becoming entrenched.

According to data from the mortgage finance agency, this week’s 30-year fixed rate was 4.42%, up from 4.16% the previous week. Freddie Mac On Thursday, (OTC:) was shown.

The NAR reported that mortgage payments rose 28% in February due to higher mortgage rates and continued house price inflation.

Lawrence Yun (NAR Chief Economist), stated, “The rise in home prices coupled with rising mortgage interest rates can easily translate into additional $200 to $300 per month in mortgage payments which is an enormous strain on many families already struggling to make ends meet.”