Pending sales of existing homes dipped month-to-month in September, according to a monthly index report from the National Association of Realtors.
The index, which is based on signed purchase contracts for sales that have not yet closed, fell 1.8 percent to 80.9 in September from an upwardly revised 82.4 in August. The index dropped considerably more, 24.9 percent, compared to September 2009, however, when there was a surge of homebuying activity the association attributed to the original deadline for the first-time homebuyer tax credit.
"Existing-home sales have shown some improvement, but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead," said Lawrence Yun, NAR’s chief economist, in a statement.
"Nonetheless, there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves. However, tight credit and appraisals coming in below a negotiated price continue to constrain the market."
Pending home sales fell month-to-month in every region except the West. The index there rose 3.5 percent to 104.6 — the highest index figure of all the regions. That’s a 24.7 percent index drop compared to September 2009, however. An index score of 100 is the average level of contract activity in 2001, the first year that index data was collected and a record year for existing-home sales.
The Midwest saw the biggest drops in September. The index there fell 5.7 percent month-to-month and 33 percent year-over-year in September, to 64.2.
In the South, the index fell 3.5 percent month-to-month and 19.1 percent year-over-year, to 87.6.
The Northeast had the lowest index in September: 59.6. That’s a 1.7 percent drop from August and a 28.3 percent drop from September 2009.
In its latest economic outlook, NAR adjusted its yearly sales figures for 2010 and 2011 lower, but pinned higher hopes on 2012. Existing-home sales are projected to fall 6.6 percent this year (up from 6.4 percent in October’s outlook), rise 6.4 percent in 2011 (down from 7.1 percent), and rise 4.7 percent in 2012 (up from a previous forecast of 4.3 percent).
New single-family sales are expected to fall 16.7 percent this year (compared to a 13.4 percent drop forecast in NAR’s previous report, released in October), rise 23.7 percent (down from a 28.9 percent rise in the previous forecast) in 2011, and increase 29.6 percent in 2012 (compared to a 28 percent rise in the earlier forecast).
"We’ve added 30 million people to the U.S. population over the past 10 years, but sales are where they were in 2000, so there appears to be a sizable pent-up demand that could come to the market once the economy gathers momentum," Yun said.
The association’s forecast for existing-home prices remained essentially flat from last month’s forecast. NAR expects a median home price of $172,600 in 2010, $173,700 in 2011, and $177,800 in 2012.
The forecast for the median new-home price rose to $219,300 in 2010, $222,600 in 2011, and $231,000 in 2012. Compared to 2009, NAR expects new home prices to rise 1.6 percent in 2010. Existing-home prices won’t see more than a 1 percent increase until 2012, NAR reported.
Fixed-rate, 30-year mortgage rates are expected to remain under 6 percent through 2012, rising slightly to 4.9 percent in 2011 and jumping to 5.8 percent in 2012.
Despite an encouraging jobs report for October, the association predicts unemployment will remain at a 9.7 percent average both in 2010 and 2011, and then drop slightly to 9.3 percent in 2012. The association had previously forecast a more optimistic 9.5 percent unemployment rate for 2011 and 9 percent unemployment rate for 2012.