Fewer homebuyers signed sales contracts in September, a result of rising home prices and mortgage rates that are making homes less affordable.
The National Association of Realtors Pending Home Index dropped a seasonally-adjusted 5.6 percent in September, its lowest level in nine months. The index is 1.2 percent below what it was in September a year ago and at its lowest level since December 2012.
No government is the problem
Lawrence Yun, chief economist for the Realtors, blamed the effects of the government shutdown for the slowdown, noting in a statement that "government and contract workers were on the sidelines with growing insecurity over lawmakers' inability to agree on a budget." He added that "A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases."
Remodeling activity heading into slowdown
The stutter in the housing market is having a trickle-down effect. Although the latest report out this month on home remodeling is upbeat for the remainder of the year, the Joint Center for Housing Studies of Harvard University predicts a slowdown in 2014.
"The soft patch that homebuilding has seen in recent months, coupled with rising financing costs, is expected to be reflected as slower growth in home improvement spending beginning around the middle of next year," Eric S. Belsky, managing director of the Joint Center, said in a statement.
However, through the end of this year, strong existing home sales are expected to translate into the strongest growth in remodeling activity since the height of the housing boom.
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