Oct
27

Pending Home Sales Off Last Month

October 27, 2011

The number of contracts to buy existing U.S. homes dropped unexpectedly in September, though activity increased from a year ago.

The National Association of Realtors® Pending Home Sales Index, a forward-looking indicator because it’s based on contact signings not closings, fell 4.6 percent last month, the biggest drop since April.

Economists had forecast a slight gain.

“A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly 2 million net new jobs in the past 12 months,” said Lawrence Yun, NAR chief economist.

With mortgage rates hovering near record lows and home prices mirroring values seen almost a decade ago, the time to buy a home is ideal. Unfortunately, high unemployment and credit restrictions from lenders are keeping buyers away.

“America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates,” Yun said. “The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates.

“We need a comprehensive approach to address housing issues — not additional impediments.”

Each area of the country saw declines in the index for September, with Chicago’s region leading the way:

*Midwest: Dropped 6.2 percent

*West: Dropped 5.6 percent

*South: Dropped 5.5 percent

*Northeast: Dropped 4.7 percent

Don’t worry, all the index numbers weren’t negative for September: Pending home sales increased 7.9 percent from September 2010.

Categories: Economy

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