Contracts for home purchases declined for the fourth consecutive month the National Association of Realtors® (NAR) said today. NAR’s Pending Home Sales Index fell 5.6 percent to 101.6 in September compared to August and is 1.2 percent below its value of 102.8 in September 2012. This is the lowest the index has slipped since last December. NAR also revised the August number down slightly from the original report of 107.7 to 107.6.
The Pending Home Sales Index is a forward looking indicator based on contract signings. These contracts are generally expected to result in closed sales over the following two months.
Higher mortgage interest rates as well as higher home prices are curbing buying power, and NAR chief economist Lawrence Yun said concerns over the government shutdown also played a role in the downturn. “Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity,” he said. “In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers’ inability to agree on a budget. A broader hit on consumer confidence from general uncertainty also curbs major expenditures such as home purchases.”