NAR Reports Pending Sales Down – Housing Market "Excessively Constrained"

Pending home sales fell for the thirdrnconsecutive month in September according to data released today by the NationalrnAssociation of Realtors^® (NAR)^.  NAR’s Pending Home Sales Index, a forwardrnlooking indicator of home sales contracts signed during the month, fell 4.6rnpercent to 84.5 in September from 88.6 in August and 89.7 in July.  Even with the downturn the index is still 6.4rnpercent higher than the September 2010 level of 79.4.  </p

Pending sales were down in every region of therncountry on a month-to-month basis but every region also showed improvement overrnlevels of one year ago.  In the Northeastrnpending sales were down 4.7 percent from August but up 4.0 percent fromrnSeptember 2010.  The current level isrn60.6.  In the South pending salesrndeclined to 91.6, a 5.5 percent month-over-month loss but 5 percent higher thanrnone year ago.  The Midwest index was 71.5rnin September compared to 76.2 in August and 63.7 one year ago, a 12.3 percentrnimprovement.  In the West the indexrndeclined 2.1 percent to 105.8 in September but is 5.6 percent higher thanrnSeptember 2010.</p

Lawrence Yun, NAR chief economist, called thernhousing market “excessively constrained.”   “A combination of weakrnconsumer confidence and continuing tight lending criteria held back homernbuyers, even though the private sector added nearly 2 million net new jobs inrnthe past 12 months,” he said.</p

Yun was critical of current federal actions.  “America’s monetary policy is contradictoryrnand confusing,” he said, where some consumers with the best financial capacityrnand top-notch credit scores pay higher mortgage interest rates.  The Federal Reserve evidently has beenrnattempting to lower mortgage rates, yet more consumers are faced with takingrnout jumbo loans that carry higher interest rates.”</p

Yun emphasized the need to reinstate higher loanrnlimits in 42 states.  “Just leaving excessive cash to sit in banks and notrnwork into the economy is a drag on the overall recovery,” he said.  “Wernneed a comprehensive approach to address housing issues – not additionalrnimpediments.”</p

The Pending Home Sale Index is based on a largernnational sample, typically representing about 20 percent of transactions forrnexisting-home sales.  The index base ofrn100 equals the average level of contract activity in 2001.  Homes entering contract are generally expectedrnto close within two months.</p

Pending Home Sales</p

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