Nationwide pending home sales fall unexpectedly in September

U.S. pending home sales declined unexpectedly in September, according to data released today by the National Association of Realtors, as buyers faced tight lending restrictions.

The Pending Home Sales Index, an indicator based on contract signings, fell 4.6 percent to 84.5 in September from 88.6 in August, but is 6.4 percent higher than September 2010 when it stood at 79.4. In the Northeast, the index declined 4.7 percent to 60.6 in September, but is 4 percent above September 2010.

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A drop in pending sales reflects the fact that the housing market is being excessively constrained, said Lawrence Yun, chief economist for NAR.

“A combination of weak consumer confidence and continuing tight lending criteria held back homebuyers, even though the private sector added nearly two million net new jobs in the past 12 months,” he said. “The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates.”

Yun advocated for reinstating higher loan limits all over the country: “Just leaving excessive cash to sit in banks and not work into the economy is a drag on the overall recovery. We need a comprehensive approach to address housing issues — not additional impediments.” — Katherine Clarke