Pending home sales declined in August as high interest rates, rising prices and restrictive mortgage credit squeezed the market
Pending home sales declined in August as high interest rates, rising prices and restrictive mortgage credit squeezed the market, according to a study released Thursday.
According to the National Association of Realtors’ Pending Home Sales Index, pending sales dropped 1.6% in August to 107.7 from a downwardly revised 109.4 in July. That’s still higher than August 2012’s 101.8; pending sales have increased year-over-year for the past 28 months, according to the NAR.
NAR Chief Economist Lawrence Yun said the decline wasn’t surprising after higher levels of closed existing-home sales at the end of the 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.”
The Pending Home Sales Index fell 1.4% in the Midwest in August, 1.6% in the West and 3.5% in the South. The index rose in the Northeast, increasing 4.0% from July and 5.1% over August 2012.
The NAR forecasts that total existing-home sales will be up about 11% to about 5.2 million this year. The national median existing home price is forecast to rise 11-12% for all of 2013, with price increases slowing to 5-6% next year as inventory improves.
