Mixed news for pending home sales
Pending home sales, or contract signings, slipped 1.6 percent in August compared to July, but improved 5.8 percent from August 2012, according to the National Association of Realtors (NAR). The trade group cites tight inventory conditions, higher interest rates, rising home prices, and persistently restrictive mortgage credit for the dip.
Pending home sales have been above year-ago levels for the past 28 months, according to NAR, welcome news for the recovery, but not without hiccups. Simultaneously, home prices continue to improve, but at a reduced pace, with a picture emerging of a continuing housing recovery, but an easing of the pace going into the fourth quarter.
Last month, the industry peaked
Dr. Lawrence Yun, NAR chief economist, said the decline was expected following elevated levels of closed existing-home sales at the end of summer. “Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he said.
“Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead,” Dr. Yun added.
Regional performance varied
According to NAR, pending home sales rose 4.0 percent in August, and 5.1 percent for the year, while the Midwest actually saw a 1.4 percent dip in contracts signed for the month, but is not in hot water, as sale are up 13.8 percent for the year.
Pending home saled fell 3.5 percent in the South, and are up 3.7 percent for the year. In the West, pending home sales fell 1.6 percent for the month, and are 1.7 percent higher than August 2012.
NAR forecasts the future
The trade group reports that “Although total existing-home sales this year will be up about 11 percent to nearly 5.2 million, little change is seen in 2014, with sales forecast to increase less than 1 percent.”
Further, “The national median existing-home price should rise 11 to 12 percent for all of 2013, easing to an increase of 5 to 6 percent next year, with general improvement expected in inventory supplies.”