Pending Home Sales Drop 5.6% for 4th Straight Decline

The Pending Home Sales Index declined for the fourth straight month, down 5.6% to 101.6 for September, according to a National Association of Realtors (NAR) report released today. 

After dropping 1.6% for August, September's index had been expected to stay at the same level. Current pending home sales are at their lowest point since December 2012, and are down 1.2% in the past 12 months. 

Source: Author, data from NAR. 

The index is based on contract signings (with sales usually finalized one or two months later) and is benchmarked to 2001 contract activity. An index of 100 is equal to the average level of contract activity during 2001, which was the first year the association examined data.

NAR chief economist Lawrence Yun noted that the then-looming threat of a government shutdown may have influenced September's results. "Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity," Yun said in a statement today. "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."

Looking ahead, the National Association of Realtors expects the median existing-home price to increase 11% to 11.5% for 2013 overall, boosted largely by consistent inventory shortages, while existing-home sales are expected to grow 10% for the year.

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  • Report this Comment On October 29, 2013, at 11:11 AM, powerstack wrote:

    The american family pie has shrunk to a level where there is not enough to go around when monthly expenses are commanding ever bigger slices. Electric bills are easily 4 to d times what they were 15 years ago, cell phone and cable bills take a big chunk while health insurance and 401 k contributions are expenses that largely did not exist back then.

    Truth is Housing Affordability does not take into account other ongoing expenses and is therefore not as reliable an indicator.

    Prices need to come down even further to start bringing a semblance of balance to the housing market.

    We are in a transition period where we are still in denial that what we see as a crisis is really the norm for now.

    Face it. Jobs are not coming back. Income will not rise as quickly. Real estate will not be appreciating and may actually depreciate.

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