NAR: August pending home sales fell 1.2%
Pending home sales fell again in August as historically low interest rates and affordability do little to spur demand, according to the National Association of Realtors. The large trade association, which has more than 1.1 million members, said its pending home sales index, which is based on contracts signed, decreased 1.2% to 88.6 for August from 89.7 for July. NAR said the index is 7.7% higher than 82.3 for the year-ago August. "Broadly speaking, contract signing activity has been holding in a narrow range for many months," said NAR chief economist Lawrence Yun. And the "unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy." He said the housing market continues to underperform due to "pent-up demand in household formations." "We continue to experience a pattern in which financially qualified homebuyers, willing to stay well within their means, are being denied credit — a factor in elevated levels of contract failures," according to Yun. "We need to remove the road blocks to the housing recovery for people who are trying to take advantage of excellent affordability conditions," Yun said. "Unfortunately, some buyers also will face notably higher mortgage rates on jumbo loans because of a lack of competition in the banking industry." NAR said the largest monthly decline was in the Northeast, which was significantly disrupted by Hurricane Irene at the end of August. The pending home sales index for the Northeast fell 5.8% in August. The index for the Midwest slipped 3.7% and declined 2.4% in the West. Pending sales in the South rose 2.6% from the prior month. Sales are higher in each region of the country from a year earlier. NAR expects 5 million existing home sales in 2011, a slight increase from last year. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.