October pending home sales dropped 0.6% to 102.1, across the United States, according to the Pending Home Sales Index. This is the fifth consecutive monthly decline.
The Index for October 2013 was 1.6% less than in the same month last year, when it stood at 103.8. October 2013 was the lowest month since December 2012 (101.3).
According to the National Association of Realtors® (NAR), “the data reflect contracts but no closings”.
NAR Chief Economist, Lawrence Yun, said:
“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.”
“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.”
October pending home sales geographical variations
While the Midwest and Northeast saw modest gains in October pending home sales, this was offset by declines in the West and South.
In the expensive regions of the West, where tight inventory is undermining contract offers, the decline and its impact were the greatest.
Yun says he expects home sales will be flat into 2014, but prices will continue rising due to limited inventory conditions.
October Pending Home Sales Index according to regions:
- Northeast, +2.8% to 85.8. Eight percent above October 2012.
- Midwest, +1.2% to 104.1., and 3.2% higher than in October 2012.
- South, (negative) -0.8% to 114.5%, a drop of 1.5% versus October 2012.
- West, (negative) -4.1% to 93.3, and 12.1% lower than in October 2012.
“New mortgage rules in January could delay the approval process, and another government shutdown would harm both housing and the economy.”
The NAR estimates that existing home sales for the whole of 2013 will be nearly 10% greater than in 2012, reaching a total of slightly more than 5.1 million. For 2014, it expects a “comparable volume”.
The median existing-home price (nationally) for 2013 is forecast to be 11% higher than in 2012. Prices are expected to rise more moderately in 2014, by between 5% and 5.5%.