Pending home sales drop the most in 3 years: NRA
Pending sales of previously owned homes in the United States fell for the fourth consecutive month, as rising mortgage rates and broader macroeconomic instability kept would-be buyers out of the market.
The Pending Home Sales Index measures the contract activity of existing single-family homes. It is a leading indicator of the overall trends in the residential real estate market.
The index of pending home sales fell 5.6 percent in September after slumping 1.6 percent the previous month, according to the National Association of Realtors. At an annualized rate, pending home sales declined 1.2 percent, after a 5.8 percent hike the previous month. Fewer Americans signed contracts to buy previously owned homes in September as rising mortgage rates and speculation about a government shutdown kept the market on edge. Last week the NAR indicated existing home sales fell for the first time in three months, after hitting a nearly four-year high in August.
“Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” said Lawrence Yun of the NAR. Potential buyers were also dissuaded by lawmakers’ inability to reconcile their differences regarding the budget. Concerns about the budget harmed consumer confidence, which “also curbs major expenditures such as home purchases,” Yun added.
The budget impasse that kept government and contract workers furloughed for 16 days will likely impact October sales. September was the first time in 29 months pending home sales were lower than year-ago levels. “This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014,” said Yun.
Sales of previously owned homes this year will be ten percent higher than 2012, the NAR concluded. The national median price for pre-existing homes is projected to rise as much as 11.5 percent in 2013, but will moderate to as much as 6 percent in 2014.
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