NAR’s Pending Home Sales Index (PHSI) declined 1.2 percent to 88.6 in August from 89.7 in July, but is 7.7 percent above August 2010. The Index is a forward-looking indicator based on contract signings. The data reflects contracts, but not closings.
The PHSI in the Northeast fell 5.8 percent to 63.6 in August, but is 1.3 percent higher than August 2010. In the Midwest, the index declined 3.7 percent to 76.2 in August, but is 8.2 percent above a year ago. Pending home sales in the South rose 2.6 percent to an index of 96.9 and are 7.6 percent higher than August 2010. In the West, which includes California, the index declined 2.4 percent to 108.1 in August but is 10.5 percent above a year ago.
“We continue to experience a pattern in which financially qualified home buyers, willing to stay well within their means, are being denied credit – a factor in elevated levels of contract failures,” said Lawrence Yun, chief economist for NAR. “Based on the improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth, we should be seeing existing-home sales closer to 5.5 million, but are expecting just over 4.9 million this year. The unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy.”
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