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Disappointment as US home sales fall again in September

Its Pending Home Sales Index, a forward looking indicator based on contract signings, fell 4.6% to 84.5 in September from 88.6 in August but is 6.4% higher than September 2010 when it stood at 79.4.
It means that the housing market is being excessively constrained, according to Lawrence Yun, NAR chief economist.
‘A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly two million net new jobs in the past 12 months,’ he said.

The PHSI in the Northeast declined 4.7% to 60.6 in September but is 4% above a year ago. In the Midwest the index dropped 6.2% to 71.5 in September but remains 12.3% higher than September 2010.

Pending home sales in the South fell 5.5% in September to an index of 91.6 but are 5% above a year ago. In the West the index declined 2.1% to 105.8 in September but is 5.6% higher than September 2010.

‘America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates. The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates,’ Yun explained.

Yun emphasized the need to reinstate higher loan limits in 42 states. ‘Just leaving excessive cash to sit in banks and not work into the economy is a drag on the overall recovery. We need a comprehensive approach to address housing issues, not additional impediments,’ he added.