Pending sales of existing U.S. homes dropped for a third successive month during September, a real estate industry group reported on Thursday, though a sales index was above year-ago levels.
The National Association of Realtors (NAR) Pending Home Sales Index, based on contracts signed in September, was down 4.6 percent to 84.5.
Economists polled by Reuters ahead of the report were expecting sales to edge up 0.1 percent rather than to decline.
Lawrence Yun, the NAR's chief economist, noted the index was still above its level in September 2010 of 79.4 but said the housing market was constrained by numerous factors.
"A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly two million net new jobs in the past 12 months," Yun said.
The September index fell in every region of the country from August levels.
Demand or pending homes sales has fallen 3 months in a row! That's an interesting data point because I would expect October and November to be soft demand periods as well.
I've talked about it before, that the latest real estate issue is a lack of demand or demand going into a vacuum.
Note: Where I live and in the surrounding cities, the inventory of homes for sale has declined. However, if demand is falling the mild improvement of lower supply has been offset by falling demand.
Lawrence Yun, NAR's Chief Economist:
Yes, we still have a weak jobs market, and while we have an increase in private market jobs, are they good high paying jobs? And have they not been offset by layoffs in the higher paying municipal world?
Yes, we still have a PRUDENT lending environment. If Lawrence Yun really thinks this is a tight lending environment, he hasn't seen anything yet. If we get another 2008 recession in 2012 or 2013 he'll see what tight lending is all about!
Yes, consumer confidence is down, but that could rebound a bit with the stock market and Europe finding or chatting up a solution of sorts.
Conforming Mortgage Limits:
One of the things that's going on is the lower conforming mortgage loan limits. They went into affect on October 1, 2011, but many banks made the change during the last 3 months. Those reduce limits are impacting the higher end markets like California.
As we head into winter, it will be interesting to see if demand continues to slide for real estate, or if a recently rising stock market and 2.5% GDP for the 3rd quarter will prevent it for now.
The demand side of the equation has become far more interesting even though a new bulge of foreclosures is making it's way through the system. People are petrified to buy real estate!
If demand continues to slide, price has to follow!
Hope all is well.
J.D. Rosendahl, Rosey