Pending home sales dipped for the fifth month in a row in October, falling 0.6 percent from September and 1.6 percent from a year ago to the lowest level since December, the National Association of Realtors said, saying the government shutdown was partly to blame.
While the Northeast and Midwest saw modest gains, those were offset by declines in the South and West, NAR Chief Economist Lawrence Yun said in a statement accompanying the release of the trade group’s Pending Home Sales Index, a forward-looking indicator of sales that’s based on contract signings.
High-cost regions of the West took the biggest hit, with tight inventory also holding back offers.
NAR’s Pending Home Sales Index, which stood at 102.1 for the nation as a whole, fell 4.1 percent in the West from September and 12.1 percent from a year ago, to 93.3.
An index of 100 is equal to the average level of contract activity during 2001, when existing-home sales fell within the “normal” range of 5 million to 5.5 million for the current U.S. population.
In the South, pending sales were down 0.8 percent from October and 1.5 percent from a year ago, to 114.5.
In the Northeast, the index was up 2.8 percent from September and 8.1 percent from a year ago, to 85.8.
The Midwest saw pending sales pick up 1.2 percent from September and 3.2 percent from a year ago, with an index reading of 104.1 in October.
Yun blamed the government shutdown in the first half of October for sidelining some potential buyers — 17 percent of Realtors surveyed by NAR said they had some sales delayed in October, typically because clients were waiting for IRS income verification to get a mortgage approved.
“We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions,” Yun said in a statement. “Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors.”
NAR is projecting that 2013 existing-home sales will finish out the year up 10 percent from 2012, totaling just above 5.1 million, and stay at that level in 2014. Home price appreciation of 11 percent is expected this year, followed by 5 to 5.5 percent next year.