Pending Sales Fall Again as Obstacles Build Up
November 26, 2013
Pending home sales fell in October — the fifth consecutive monthly decline — as home buyers find themselves up against several obstacles.
The National Association of REALTORS®’ Pending Home Sales Index, which measures contract signings, dropped 0.6 percent in October from September and is 1.6 percent below year-ago levels. The index is at its lowest point since December 2012.
“The government shutdown in the first half of last month sidelined some potential buyers,” says Lawrence Yun, NAR’s chief economist. Seventeen percent of real estate professionals reported closing delays in October, mostly attributing that to the IRS's incapability of verifying income for mortgage approvals during the shutdown, Yun says.
Limited inventories and falling housing affordability will likely impact the pending sales index in future months as well, Yun says. “Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,” he says.
But the new year will bring new concerns for the housing recovery, too. “New mortgage rules in January could delay the approval process, and another government shutdown would harm both housing and the economy,” Yun says.
By region, the Pending Home Sales Index in October gained in the Northeast by 2.8 percent and is 8.1 percent above year-ago levels. Pending home sales also rose in the Midwest, increasing 1.2 percent in October, 3.2 percent higher than last year’s levels. In the South, they decreased 0.8 percent in October, 1.5 percent below year-ago levels. They fell the most in the West, dropping 4.1 percent in October, 12.1 percent lower than year-ago levels.
— Melissa Tracey, REALTOR® Magazine
Updated: February 26, 2020