Contracts to Buy US Homes, Mortgage Rates Fall Slightly in August

WASHINGTON (AP) - The number of Americans who signed contracts to buy previously occupied homes fell in August from a two-year high in July.

The National Association of Realtors says its index of sales agreements dropped 2.6 percent last month to 99.2. In July, the index rose to 101.9. That was the highest level since April 2010, when the market benefited from a federal home-buying tax credit.

A reading of 100 is considered healthy. The index is 10.7 percent higher than it was a year ago. The index bottomed at 75.88 in June 2010 after the tax credit expired.

Contract signings typically indicate where the housing market is headed. There's generally a one- to two-month lag between a signed contract and a completed deal. Last month, completed sales hit a two-year high.

Average U.S. rates on fixed mortgages fell again to new record lows. The decline suggests the Federal Reserve's stimulus efforts may be having an impact on mortgage rates.

Mortgage buyer Freddie Mac says the rate on the 30-year loan dropped to 3.40 percent. That's down from last week's rate of 3.49 percent, which was the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, fell to 2.73 percent, down from the record low of 2.77 percent last week.

The Fed is spending $40 billion a month to buy mortgage-backed securities. The goal is to lower mortgage rates and help the housing recovery. Fed Chairman Ben Bernanke says the program will continue until there is substantial improvement in the job market.

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