The National Association of Realtors (NAR) reports that pending home sales have slipped in the U.S. housing market yet again in September. NAR analysts note that it is the fourth consecutive month the Pending Home Sales Index has dropped, which puts it at its lowest level since December 2012. Experts point to declining housing affordability as the main culprit, while government budget wrangling has likely shaken confidence among both buyers and builders. The lowered index has caused the NAR to revise its expectations for the fourth quarter to reflect lower home sales. For more on this continue reading the following article from Property Wire.
Pending home sales in the United States declined for the fourth consecutive month in September, according to the latest data from the National Association of Realtors.
The Pending Home Sales Index, a forward looking indicator based on contract signings, fell 5.6% to 101.6 in September from a downwardly revised 107.6 in August, and is 1.2% below September 2012 when it was 102.8.
It means that the index is at the lowest level since December 2012 when it was 101.3 and Lawrence Yun, NAR chief economist said it is a result of higher mortgage interest rates and higher home prices curbing buying power but concerns over the government shutdown also played a role.
‘Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity. In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases,’ he explained.
He pointed out that this is the first time in 29 months that pending home sales weren’t above year ago levels. ‘This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014. Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single digit growth rate next year,’ he added.
The PHSI in the Northeast dropped 9.6% to 76.7 in September, and is 6.4% below a year ago. In the Midwest the index fell 8.3% to 102.3 but is 5.7% higher than September 2012. Pending home sales in the South slipped 0.4% to an index of 116.2 but are 2% above a year ago. The index in the West dropped 9% to 97.3 and is 9.8% lower than September 2012.
Yun said that total existing home sales this year will be 10% higher than 2012, reaching more than 5.1 million, and are likely to hold even in 2014.
The national median existing home price is expected to rise 11 to 11.5% for all of 2013, but moderate to a 5 to 6% gain in 2014.
This article was republished with permission from Property Wire.