Index on Home-Sale Signed Contracts Slips to 1-Year Low

Index on Home-Sale Signed Contracts Slips to 1-Year Low  The closely-watched index that measures pending home sales, or signed contracts but not closings, slipped again in October, falling to its lowest level in one year.
The reasons for the slump are mainly falling inventory and diminishing affordability, fueled by higher prices and higher interest rates.
Pending home sales marked the fifth consecutive monthly decline, according to the National Association of Realtors.
The index, a forward-looking indicator based on contract signings, slipped 0.6 percent to 102.1 in October, from an upwardly revised 102.7 in September, and is 1.6 percent below October 2012 when it was 103.8.
The index is at the lowest level since December 2012 when it was 101.3.
Lawrence Yun, NAR chief economist, said weaker activity was expected.
The government shutdown in the first half of last month sidelined some potential buyers, he said.
In a survey, 17 percent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval.
“We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions,” Yun said. “Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors.”
Modest gains in the Northeast and Midwest were offset by declines in the South and West.
Yun emphasized that there was a greater impact in the high-cost region of the West, where tight inventory also is holding back contract offers.
He expects generally flat home sales going into 2014, but continued growth in home prices from limited inventory conditions.

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