As the National Association of Realtors®
(NAR) said it had anticipated, pending home sales eased in August falling what
may have been accelerated activity earlier in the summer. NAR said tight inventory conditions, higher
interest rates, rising home prices, and continuing restrictive mortgage credit
all played a role in the lower August Pending Home Sales Index.
The index dipped 1.6 percent in to 107.7
from a revised 109.4 in July. Still it
continued its 28 month streak of annual increases and was up 5.8 percent above its
August 2012 level of 101.8.
The index is a forward-looking indicator
based on home purchase contracts not closings.
Pending sales are generally expected to close within one to two months
of contract signing.
Lawrence Yun, NAR chief economist, said the decline was expected following elevated
levels of closed existing-home sales at the end of summer. "Sharply rising
mortgage interest rates in the spring motived buyers to make purchase
decisions, culminating in a six-and-a-half-year peak for sales that were
finalized last month," he said. "Moving forward, we expect lower levels of
existing-home sales, but tight inventory in many markets will continue to push
up home prices in the months ahead."
projecting that by year-end existing-home sales will total nearly 5.2 million,
an 11 percent increase from 2012 but it sees little change in 2014, perhaps
less than 1 percent. The national median
existing-home price should rise 11 to 12 percent for all of 2013, easing to an
increase of 5 to 6 percent in 2014 as housing inventories improve.
The Pending Home
Sale Index rose 4.0 percent in the Northeast to 84.8 in August, and is 5.1
percent above a year ago. In the Midwest the index declined 1.4 percent to
111.6 compared to July but is 13.8 percent higher than August 2012. Pending home sales in the South fell month-over-month
by 3.5 percent to 116.9 but remain 3.7 percent above a year ago. The index in
the West declined 1.6 percent in August to 106.9, but is 1.7 percent higher
than August 2012.
Home Sales Index is based on a large national sample typically representing
about 20 percent of transactions for existing-home sales. An index of 100 is
equal to the average level of contract activity during 2001, which was the
first year to be examined.