Economy Watch: Pending Home Sales Edge Down
- Sep 27, 2013
According to the National Association of Realtors on Thursday, the Pending Home Sales Index, a forward-looking indicator based on contract signings (but not closings), dropped to 107.7 in August from a downwardly revised 109.4 in July. That’s still above August 2012, however, when the index was 101.8. Pending sales have been above year-ago levels for the past 28 months.
NAR chalked up the drop to tight inventory conditions, higher interest rates, rising home prices, and continuing restrictive mortgage credit. “Sharply rising mortgage interest rates in the spring motivated buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” NAR chief economist Lawrence Yun noted in a statement. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.”
The Realtors also predict that although total existing-home sales this year will be up about 11 percent to nearly 5.2 million units, little change in sales will be seen in 2014, with sales forecast to increase less than 1 percent. The national median existing-home price should rise 11 to 12 percent for all of 2013, but ease to an increase of 5 to 6 percent next year, with general improvement expected in inventory supplies.
Mortgage delinquencies continue to drop
Lender Processing Services (LPS) released its First Look report for August on Thursday, which found that the U.S. mortgage delinquency rate—which the company defines as loans 30 or more days past due, but not in foreclosure—decreased to 6.2 percent from 6.41 percent in July. The “normal” rate for delinquencies—that is, the rate recorded during periods of relative economic health—ranges from 4.5 percent to 5 percent.
The percentage of loans actually in the foreclosure, which has been the bane of local residential real estate markets in recent years, dropped to 2.66 percent in August from 2.82 percent in July. That’s still a good bit higher than the “normal” rate of around 1 percent, but it’s still the lowest level in more than four years.
The states with the highest percentage of noncurrent loans, including both delinquent and in foreclosure, include Florida, Mississippi, New Jersey, New York and Maine, according to LPS. Those states with the lowest percentage of noncurrent loans are out West in the energy-boom states, including Montana, Colorado, Wyoming, and the Dakotas.
Initial unemployment claims drop
The U.S. Department of Commerce reported on Thursday that for the week ending Sept. 21, initial unemployment claims were 305,000, a decrease of 5,000 from the previous week. The four-week moving average was 308,000, a decrease of 7,000 from the previous week, and the lowest that figure has been since mid-2007, before the recession.
Wall Street had an up day on Thursday after a run of losers, despite the prospect of federal government shut down come Oct. 1. The Dow Jones Industrial Average was up 55.04 points, or 0.36 percent, while the S&P 500 gained 0.35 percent and the Nasdaq advanced 0.7 percent.