Signed contracts for home purchases continued to dwindle in October according to the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI).
The future contract signings indicator fell by 0.6 percent to 102.1 in October from 102.7 in September and was 1.6 percent lower than in October of last year when the Index was at 103.8. It was the fifth consecutive month that the Index has declined.
In May of this year, the Index had reached its highest level in over six years but has been on the downhill slide ever since.
Lawrence Yun, chief economist of NAR, stated, “The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors® reported delays in October, mostly from waiting for IRS income verification for mortgage approval.”
Two of the four the regions in the Index posted increases in their monthly level of contract signing activity and two of the four regions also reported a higher level of contract signings when compared to a year ago.
The Northeast posted the largest monthly increase in activity, rising 2.8 percent from the previous month followed by the Midwest with a gain of 1.2 percent. The South reported a decline of 0.8 percent while the West posted a decline of 4.1 percent.
The Northeast reported the largest increase in contract signings compared to October of last year with an 8.1 percent increase followed by the Midwest which stayed 3.2 percent above last year. The West region suffered the largest decline of 12.1 percent compared to last year while the South posted a 1.5 percent decline in contract signings.
The PHSI is a forward looking indicator which generally indicates closings one to two months in the future.
“We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,” Yun added.
Tags: pending home sales, existing home sales, contract signings
National Association of Realtors
Reported by Chris Moore