Oct. 31, 2011 6:33 a.m.
WASHINGTON — Pending home sales declined in September, although activity remains above a year ago. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The National Association of Realtors Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 4.6% to 84.5 in September from 88.6 in August but is 6.4% higher than September 2010 when it stood at 79.4. The data reflects contracts but not closings.
“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, association chief economist.
In the Midwest, the index dropped 6.2% to 71.5 in September but remains 12.3% higher than September 2010. In the Northeast, the decline was 4.7% to 60.6 in September but is 4% above a year ago. Pending home sales in the South fell 5.5% to an index of 91.6 but are 5% above a year ago. In the West, the index declined 2.1% to 105.8 in September but is 5.6% higher than September 2010.
“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 noted. “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.”
Yun emphasized the need to reinstate higher loan limits in 42 states. “Just leaving excessive cash to sit in banks and not work into the economy is a drag on the overall recovery,” he said.
The National Association of Realtors is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Published by The Business Journal, Youngstown, Ohio