WASHINGTON (October 27, 2014) – Pending home sales rose slightly in September and are now above year-over-year levels for the first time in 11 months, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, inched 0.3 percent to 105.0 in September from 104.7 in August, and is now 1.0 percent higher than September 2013 (104.0). The index is above 100 for the fifth consecutive month and is at the second-highest level since last September.
Lawrence Yun, NAR chief economist, says moderating price growth and sustained inventory levels are keeping conditions favorable for buyers. “Housing supply for existing homes was up in September 6 percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year,” he said. “Additionally, the current spectacularly low mortgage rates should help more buyers reach the market.”
Despite improved housing conditions and low interest rates, tight credit conditions continue to be a barrier for some buyers. Of the reasons for not closing a sale, about 15 percent of Realtors® in September reported having clients who could not obtain financing as the reason for not closing1.
Yun says the final rule on Qualified Residential Mortgages should improve access to credit once it goes into effect next year. “The rule provides clarity for lenders and is a win for creditworthy consumers by ensuring they continue to have access to safe and affordable loan products without overly burdensome downpayment requirements,” he said.
The PHSI in the Northeast increased 1.2 percent to 87.5 in September, and is now 2.9 percent above a year ago. In the Midwest the index decreased 1.2 percent to 101.2 in September, and is now 4.0 percent below September 2013.
Pending home sales in the South increased 1.4 percent to an index of 118.5 in September, and is 1.7 percent above last September. The index in the West inched back 0.8 percent in September to 101.3, but is still 3.6 percent above a year ago.
Yun will present NAR’s 2015 economic outlook and forecast on Friday, Nov. 7 at the 2014 REALTORS® Conference & Expo in New Orleans. Federal Housing Finance Agency Director Mel Watt will join Yun to discuss his perspective on the current housing market, issues facing consumers and sustaining the ongoing housing market recovery.
Members of the media may register in advance to attend NAR’s annual conference by contacting Yolanda Byrd, 202-383-7515 or firstname.lastname@example.org. Onsite press registration will begin Thursday, Nov. 6 through Sunday, Nov. 9, 8 a.m.–5 p.m.; and Monday, Nov. 10, 8 a.m.–noon at the Morial Convention Center, Room 214.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
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1According to September’s Realtors® Confidence Index.
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.
NOTE: Third quarter metropolitan area home prices will be published November 6, Existing-home sales for October will be reported November 20, and the next Pending Home Sales Index will be November 26; release times are 10:00 a.m.