In August, the purchases of previously owned homes declined from the previous month. This decline was attributed to the mortgage rates being at a two year high. Many economists say this factored in to the slowdown into the growth of the US residential real estate market according to a report to be released this week.

The contract closures fell 2.6% to a 5.25 million annualized rate from the previous highest rate last November 29. This figure was the median forecast from a Bloomberg survey of 62 economists just before the release of the data from the National Association of Realtors on Sept 19. There is another report yet to be released that indicate home constructions increased in August, as reflective of orders in the preceding months leading to the run-up in interest rates.

The increasing costs of borrowing may limit the pace of the housing recovery that had been the centerpiece of the economy. The coming meeting of the Federal Reserve policy wonks this week would decide on the pace of expansion and the strengthening of the labor market would be sufficient to scale back purchases of government as well as mortgage securities.