WASHINGTON, DC-Pending home sales declined for the fourth consecutive month in September, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, dropped 5.6% to 101.6 in September from a downwardly revised 107.6 in August. It is now 1.2% below September 2012 when it was 102.8. In short, the direction is not favorable, especially by historical standards. Parsed another way: the index is at the lowest level since December 2012 when it was 101.3. Or this: this is the first time in 29 months that pending home sales weren't above year-ago levels.
While the index has been on a downward trajectory for the last few months, September had its own particular issues, a NAR spokesman tells GlobeSt.com – namely there was the pending fear of a government shutdown and possible US debt default. "Certainly the government and contract workers stayed on the sidelines, waiting to see what would happen," the spokesman says. More broadly, consumers appear to be losing confidence in the economic recovery, which is also having an impact, he says.
Lawrence Yun, NAR chief economist, is predicting lower home sales for the fourth quarter, with a flat trend going into 2014. "Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year," he says.
For the Northeast, the index dropped 9.6% to 76.7 in September, and is 6.4% below a year ago. In the Midwest the index fell 8.3% to 102.3 in September, but is 5.7% higher than September 2012. The South saw pending home sales drop 0.4% to an index of 116.2 in September, but are 2% above a year ago. The index in the West dropped 9% in September to 97.3, and is 9.8% lower than September 2012.
Total existing-home sales this year will be 10% higher than 2012, reaching more than 5.1 million, NAR also noted, and are likely to hold even in 2014. The national median existing-home price is expected to rise 11 to 11.5% for all of 2013, but moderate to a 5 to 6% gain in 2014.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
