Pending home sales fall across the United States, latest index shows

Pending home sales in the United States cooled in September for the second month in a row, taking them to their second lowest index reading in 2015, according to the latest index.

All four major regions experienced a pullback in activity in September, the Pending Home Sales Index, a forward looking indicator based on contract signings, from the National Association of Realtors shows.

The index declined 2.3% to 106.8 in September from a slightly downwardly revised 109.3 in August but is still 3% above September 2014 when it was 103.7. With last month's decline, the index is now at its second lowest level of the year but has still increased year on year for 13 straight months.

Lawrence Yun, NAR chief economist, said that a combination of factors likely led to September's dip in contract signings. ‘There continues to be a dearth of available listings in the lower end of the market for first time buyers and realtors in many areas are reporting stronger competition than what's normal this time of year because of stubbornly low inventory conditions,’ he explained.

‘Additionally, the rockiness in the financial markets at the end of the summer and signs of a slowing US economy may be causing some prospective buyers to take a wait and see approach,’ he added.

Despite contract activity softening from the more robust levels seen earlier this year, Yun believes the housing market will still likely be one of the brighter spots in the economy in coming months.

‘With interest rates hovering around 4%, rents rising at a near eight year high, and job growth holding strong, albeit at a more modest pace than earlier this year, the overall demand for buying should stay at a healthy level despite some weakness in the overall economy,’ he added.

The PHSI in the Northeast fell 4% to 89.6 in September, but is still 3.9% above a year ago. In the Midwest the index declined 2.5% to 104.7 in September, but remains 4.3% above September 2014.

Pending home sales in the South decreased 2.6% to an index of 118.3 in September and are now 0.1% below last September. The index in the West inched back 0.2% in September to 104.4, but is still 6.6% above a year ago.