Home-Sale Contract Signings Ease on Tighter Credit, Inventories

Pending home sales -- the closely watched measure of contract signings from Realtors -- slowed in August, as tight inventories, higher interest rates, rising home prices and restrictive mortgage credit weighed on the market.Pending home sales — the closely watched measure of contract signings from Realtors — slowed in August, as tight inventories, higher interest rates, rising home prices and restrictive mortgage credit weighed on the market.
The National Association of Realtors said Thursday that its pending home sales index eased 1.6 percent to 107.7 in August, from a downwardly revised 109.4 in July. But it remains 5.8 percent above August 2012 when it was 101.8.
The Realtors’ data reflect contracts but not closings. Pending sales have been above year-ago levels for the past 28 months.
Although total existing-home sales this year will be up about 11 percent to nearly 5.2 million, little change is seen in 2014, with sales forecast to increase less than 1 percent.
The national median existing-home price should rise 11 to 12 percent for all of 2013, easing to an increase of 5 to 6 percent next year, with general improvement expected in inventory supplies.
Lawrence Yun, NAR chief economist, said the decline in pending sales for August was expected following elevated levels of closed existing-home sales at the end of summer.
“Sharply rising mortgage interest rates in the spring motivated buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he said.
Realtors expected lower levels of home resales, but tight inventory in many markets will continue to push up home prices for the rest of the year, Yun said.
The pending home sales index in the Northeast rose 4.0 percent to 84.8 in August, and is 5.1 percent above a year ago.
In the Midwest, the index declined 1.4 percent to 111.6 in August, but is 13.8 percent higher than August 2012.
Pending home sales in the South fell 3.5 percent to an index of 116.9 in August, but are 3.7 percent above a year ago.
The index in the West declined 1.6 percent in August to 106.9, but is 1.7 percent higher than August 2012.
An pending home sales index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined.

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