U.S. pending home sales down in August

Pending home sales slipped in August throughout the country,
but were higher than a year ago, according to the National Association
of Realtors data released today.

Nationally, the Pending Home Sales Index declined 1.2 percent to 88.6
in August from 89.7 in July but is 7.7 percent above August 2010 when
it stood at 82.3. The data reflects contracts, but not closings.

Lawrence Yun, NAR’s chief economist, said the nationwide drop reflects an uneven
market.

“The biggest monthly decline was in the Northeast, which was
significantly disrupted by Hurricane Irene in the closing weekend of
August,” he said. “But broadly speaking, contract signing activity has
been holding in a narrow range for many months.”

The Pending Home Sales Index in the Northeast fell 5.8 percent to
63.6 in August but was 1.3 percent higher than in August 2010. Pending
home sales in the South rose 2.6 percent to an index of 96.9 and
7.6 percent higher than August 2010. In the Midwest, the index declined
3.7 percent to 76.2 in August but was 8.2 percent above a year prior. In
the West, the index declined 2.4 percent to 108.1 in August but is 10.5
percent above a year ago.

Yun said the market is underperforming given a pent-up demand in
household formation. “We continue to experience a pattern in which
financially qualified homebuyers, willing to stay well within their
means, are being denied credit — a factor in elevated levels of
contract failures,” he said. “The
unnecessarily restrictive mortgage underwriting standards are
attenuating the housing recovery and are a risk factor for the overall
economy.”

Economic uncertainty is also causing some homebuyer hesitation.

“We need to
remove the road blocks to the housing recovery for people who are
trying to take advantage of excellent affordability conditions,” Yun
added. “Unfortunately, some buyers also will face notably higher
mortgage rates on jumbo loans because of a lack of competition in the
banking industry.” — Miranda Neubauer