September Pending Home Sales Edge Up

Pending home sales rose slightly in September, buoyed by strong increases in the West and Midwest, the National Association of Realtors reported yesterday.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased by 0.5 percent to 104.6 in September from 104.1 in August. However, year-over-year, contract signings dropped by 1.0 percent, marking the ninth straight month of annual decreases.

Pending sales in the West increased by 4.5 percent in September to 93.1 but fell by 7.4 percent below a year ago. In the Midwest, the index rose by 1.2 percent to 102.4 in September but fell by 1.1 percent from a year ago. Sales in the South fell by 1.4 percent to 119.6 in September; however, that is 3.3 percent higher than a year ago. The Northeast saw an 0.4 percent decrease to 92.3 in September and fell by 2.7 percent from a year ago.

“This shows that buyers are out there on the sidelines, waiting to jump in once more inventory becomes available and the price is right,” said NAR Chief Economist Lawrence Yun. “When compared to the year 2000, when the housing market was considered very healthy, and home sales figures were roughly equivalent and the affordability conditions were much lower compared to now. So even though affordability has been falling recently, the demand for housing should remain steady.”

Yun noted while the economy, is thriving it has yet to have a substantial impact on the real estate market. However, Yun believes that may be about to change. “The general condition of the economy is excellent, it simply has not lifted home sales this year,” he said. “Home prices are still rising, so people who are purchasing are still seeing wealth gains.”