September Pending Home Sales Up Slightly

Pending home sales increased slightly in September, the National Association of Realtors reported yesterday, with upticks in the populous South and West regions.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased by 1.5 percent to 110.0 in September from a slight downward revision of 108.4 in August. With last month’s gain, the index is 2.4 percent higher from a year ago (107.4) and has now risen year-over-year for 22 of the past 25 months.

Increases in the South and West offset declines in the Northeast and Midwest. Pending home sales in the South rose by 1.9 percent to 122.1 in September and improved by 1.7 percent from a year ago. In the West, pending sales jumped by 4.7 percent to 107.3 and by 4.0 percent from a year ago. Pending sales in the Northeast fell by 1.6 percent to 96.5 in September, but were 7.7 percent above a year ago. In the Midwest the index declined by 0.2 percent to 104.6 and fell by 1.0 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted pending home sales have risen 0.7 percent on a three-month moving average basis and are up 2.0 percent year-to-year. “The series has declined in four of the past nine months, however,” he said. “Sales are being held back by a lack of inventory. Existing home inventories have fallen nearly 6.8 percent over the past year.”

NAR Chief Economist Lawrence Yun said the robust increase in the West and a healthy bump in the South made the difference. “Buyer demand is holding up impressively well this fall with realtors reporting much stronger foot traffic compared to a year ago,” he said. “Although depressed inventory levels are keeping home prices elevated in most of the country, steady job gains and growing evidence that wages are finally starting to tick up are encouraging more households to consider buying a home.”

Yun said low housing inventory continues to plague the housing market. “The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country,” he said. “It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.”