The number of home buyers who signed contracts to purchase an existing home fell for the fourth consecutive month in September according to the National Association of Realtors® (NAR) Pending Home Sales Index (PHSI).
The future contract signings indicator fell by 5.6 percent to 101.6 in September from 107.6 in August and was 1.2 percent lower than in September of last year when the Index was at 102.8, the first time the Index has been lower than the previous year in 29 months.
In May of this year, the Index had reached its highest level in over six years but has been on the slide ever since.
Lawrence Yun, chief economist of NAR, stated, “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity. In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases.”
All four of the regions in the Index posted declines in their monthly level of sales contract activity, while two of the four regions reported a higher level of contract signings when compared to a year ago.
The Northeast posted the largest monthly decline, falling 9.6 percent from the previous month followed by the West with a decline of 9.0 percent and the Midwest with a decline of 8.3 percent while the South posted the smallest decline of 0.4 percent.
The Midwest reported the largest increase in contract signings compared to September of last year with a 5.7 percent increase followed by the South which stayed 2.0 percent above last year. The West region suffered the largest decline of 9.8 percent compared to last year while the Northeast posted a 6.4 percent decline in contract signings.
The PHSI is a forward looking indicator which generally indicates closings one to two months in the future.
Tags: pending home sales, existing home sales, contract signings
National Association of Realtors
Reported by Chris Moore