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Pending home sales: Not all bad

By Judy Martel · Bankrate.com
Monday, November 25, 2013
Posted: 3 pm ET

Pending home sales, which are signed contracts to buy existing homes, moved lower for the fifth consecutive month, according to the National Association of Realtors.

The NAR's index of pending home sales fell by 0.6 percent in October and is at the lowest level since December 2012.

More headwinds than a hurricane

The government shutdown in October caused some delays, as potential buyers awaited IRS income verification for mortgage approval, according to Lawrence Yun, NAR's chief economist.

But the shutdown wasn't the only factor hampering sales. "We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions." Yun added in a statement. "Job creation and a slight dialing down from current stringent mortgage-underwriting standards going into 2014 can help offset the headwind factors."

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West was worst

In the Northeast and Midwest, there were slight gains in signed contracts, with the Midwest seeing a 1.2-percent gain and the Northeast a 2.8-percent gain. But those were offset by a drop in the West of 4.1 percent and in the South of 0.8 percent.

Annual existing-home sales are predicted to be nearly 10 percent higher this year than last. Going into next year, Yun said he expects lack of inventory to cause home sales to be flat and prices to continue to rise.

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