Pending Sales Index in 3rd Straight Monthly Drop

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A lack of inventory and the tougher requirements for getting a mortgage contribute as much to this drop in the pending sales index as the higher mortgage rates. New housing starts are up and that is reflected in the rise in the new home contracts. Please read the article below.

 

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Continuing to respond to higher mortgage rates, the Pending Home Sales Index (PHSI) slipped for the third straight month, dropping 1.6 percent in August to 107.7 the lowest level since April, the National Association of Realtors which compiles the index reported Thursday. Economists had expected a more modest decline, 1.0 percent, to 108.3. NAR also revised the July index down to 109.4 from the originally reported 109.5.

 

The index covered the same month in which new home sales, reported Wednesday by the Census Bureau of Department of Housing and Urban Development, improved 7.9 percent. Like the PHSI, new home sales are tracked when buyers sign contracts. The existing home sales report for, also a product of the NAR, is based on closed transactions.

 

NAR Chief Economist Lawrence Yun said the drop was expected as a consequence of buyers accelerating purchase decisions while mortgage rates were increasing. Indeed, existing home sales jumped in both July and August. The corresponding PHSI rose a sharp 5.8 percent in May – the strongest month-month increase in two years. The index dropped a scant 0.4 percent in June.

 

Yun downplayed expectations for home sales.

 

“Moving forward, we expect lower levels of existing-home sales,” he said, “but tight inventory in many markets will continue to push up home prices in the months ahead.”

 

To read the complete article please use the link below.

Pending Sales Index

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