Pending Home Sales Down Again in August

NAHB expects existing (and pending) home sales remain relatively flat for the remainder of the year, before beginning to pick up in 2012.
Courtesy of NAHB

Pending homes sales declined again in August. National Association of Realtors (NAR) revealed the Pending Home Sales Index (PHSI)—a forward-looking indicator based on contract signings—slipped 1.2 percent to 88.6. This follows a 1.3 percent decline in July.

Results were mixed across the regions. A notable decline in the PHSI was observed in the Northeast (-5.8 percent), where sales were significantly disrupted by Hurricane Irene. PHSI also contracted in the Midwest (-3.7 percent) and West (-2.4 percent), but there was a moderate gain in the South (+2.6 percent).

Overall the index has generally moved sideways in 2011, showing a slight decline from a value of 88.9 in January. The lack of progress is a reflection of the soft economy and weak employment growth since the beginning of the year.

NAR suggested the market is underperforming. Based on improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth existing home sales should be higher than they currently are.

Given the current weak economic activity, slow jobs growth, low consumer confidence and restrictive mortgage lending standards—in addition to the imminent lowering of conforming loan standards—there is little to stimulate housing demand.

- Courtesy of NAHB