Its Pending Home Sales index, a forward looking indicator based on contract signings, fell slightly by 0.6% to 102.1 last month from an upwardly revised 102.7 in September, and is 1.6% below October 2012 when it was 103.8.
Lawrence Yun, NAR chief economist said that the index is at the lowest level since December 2012 when it was 101.3, and said that weaker activity is expected in the aftermath of the government shut down last month.
‘The shutdown sidelined some potential buyers. In a survey, 17% realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval,’ he explained.
‘We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,’ he added.
The index data shows that modest gains in the Northeast and Midwest were offset by declines in the South and West. Yun pointed that there was a greater impact in the high cost region of the West, where tight inventory also is holding back contract offers. He expects generally flat home sales going into 2014, but continued growth in home prices from limited inventory conditions.
The PHSI in the Northeast rose 2.8% to 85.8 in October, and is 8.1% above a year ago. In the Midwest the index increased 1.2% to 104.1 in October, and is 3.2% higher than October 2012.
Pending home sales in the South slipped 0.8% to an index of 114.5 in October, and are 1.5% below a year ago. The index in the West fell 4.1% in October to 93.3, and is 12.1% lower than October 2012.
Yun said there are concerns heading into 2014. ‘New mortgage rules in January could delay the approval process, and another government shutdown would harm both housing and the economy,’ he pointed out.
The data also shows that annual existing home sales should be nearly 10% higher this year than in 2012, totalling just above 5.1 million, with a comparable volume expected in 2014. The national median existing home price for 2013 is projected to be 11% above last year, and then cool to a 5% to 5.5% increase in 2014.
