WASHINGTON (Reuters) – Contracts to buy U.S. previously owned homes fell for a second straight month in October as an acute shortage of properties pushed up prices, though the housing market remains supported by record low mortgage rates.

The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, decreased 1.1% to 128.9. Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, would rebound 1.0% in October.

Compared to a year ago, pending homes sales jumped 20.2% in October. The monthly decline in contracts suggests a moderation in sales of existing home sales after they accelerated in October to their highest level since November 2005.

The housing market is being driven by record low mortgage rates. The COVID-19 pandemic, which has seen at least 21% of the labor force working from home, has led to a migration from city centers to suburbs and other low-density areas as Americans seek out more spacious accommodation for home offices and schools.

The coronavirus recession, which started in February, has disproportionately affected lower-wage earners. At least 20 million people are on unemployment benefits. The 30-year fixed mortgage rate is around an average 2.72%, according to data from mortgage finance agency Freddie Mac.

Housing supply has failed to keep up with demand, boosting home prices out of the reach of many first-time buyers, despite builders ramping up construction. The government reported this month that single-family homebuilding, the largest share of the housing market, raced to the highest level since April 2007.

Though homebuilder confidence is at historic highs, builders have complained about shortages of land and materials.

In October, pending home sales edged up 0.1% in the South. They were unchanged in the West. Contracts dropped 5.9% in the Northeast and fell 0.7% in the Midwest.

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