- Posted at 12:51, November 25, 2013
- By Russ Bleemer
Pending home sales declined in October for the fifth consecutive month, according to this morning's National Association of Realtors' report.
The trade group for commercial and residential real estate professionals said that its Pending Home Sales Index is at its lowest point since December 2012.
The index is considered a leading indicator for the strength or weakness of the housing sector, and is based on pending sales of existing homes.The data looks at contracts, not closings.
"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 association explains.
NAR chief economist Lawrence Yun said the weaker activity was expected. "The government shutdown in the first half of last month sidelined some potential buyers," he noted in a press release. The survey said that 17% of the association members surveyed reported October delays, "mostly from waiting for IRS income verification for mortgage approval," according to Yun.
He noted that "limited inventory and falling affordability conditions" cloud the outlook. But more jobs and a retreat from "current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors," Yun said in the press release.
Modest Northeast and Midwest gains were offset by declines in the South and West, the report notes. The index in the Northeast is 8.1% above a year ago, while the West is 12.1% lower than October 2012.
The NAR projects annual existing-home sales to be nearly 10% higher this year than in 2012, totaling just above 5.1 million. It projects a comparable 2014 volume. The 2013 national median existing-home price is projected to be 11% above 2012, but slow to the 5% to 5.5% increase range next year.