Pending sales of existing homes fall below mark considered healthy
After hitting a two-year high, pending sales of previously occupied homes fell in August below the threshold considered healthy, according to a trade group.
An index of signed contracts had hit 101.9 in July, reaching its highest point since home buyers swarmed the market in April 2010 to take advantage of a government tax credit. But in August, the measure dipped 2.6% to 99.2, according to the National Assn. of Realtors.
A reading of 100 is considered historically healthy. Pending sales are considered a leading indicator for the housing market, usually coming a month or two before home sales are finalized.
Compared to the August 2011 reading of 89.6, though, last month’s gauge was 10.7% higher.
The Realtors association’s chief economist, Lawrence Yun, blamed the volatility in the market in part on a dearth of lower-priced homes nationwide and widespread inventory shortages across all prices in the West.
Only the Northeast saw a boost in signed contracts. The West suffered the deepest plunge – a 7.2% monthly drop to 102.5, or 4.2% lower than last August.
Still, Yun was optimistic. Existing home sales this year will rise 9% to 4.64 million before booming another 9% next year, he predicted.
Other recent data has pointed to a gradual, if inconsistent real estate recovery. Homes sold last month at the fastest clip in more than a year. Mortgage rates are at new lows. New home sales slipped slightly last month, but prices made their largest jump ever.
Last week, the Realtors’ association said that residential construction starts and existing home sales both increased.
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