Mess Slowed September Home Sales

U.S. pending home sales slipped for the first time in three months in September as foreclosure moratoriums slowed sales.

The National Association of Realtors’ index for pending sales of existing homes fell 1.8% to 80.9, the industry group said Friday. Economists surveyed by Dow Jones Newswires had expected pending home sales would increase by 3% in September.

Year over year, the pending-home-sales index is 24.9% below its level of 107.8 in September 2009. The NAR on Friday also revised its August index upward slightly to 82.4 from the previously estimated 82.3.

The NAR index is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn’t closed. Pending sales typically close within one or two months of signing.

Pending home sales plummeted in May after the expiration of a government tax credit program but had been on the rise in July and August as rock-bottom mortgage rates and distressed property sales enticed buyers.

“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, the association’s chief economist.

Several banks have been accused of improperly filing foreclosure actions based on paperwork that hadn’t been properly reviewed. Some have halted foreclosures.

Yun expects pent-up demand for housing to drive up pending home sales as banks resolve paperwork issues that have stalled foreclosure sales. Still, he said “tight credit and appraisals coming in below a negotiated price continue to constrain the market.”

The National Association of Realtors is forecasting existing-home sales in 2011 will rise to more than 5.1 million from about 4.8 million this year. It expects housing starts to rise to 716,000 in 2011 from 598,000 this year.

“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 expects median home prices will rise to $173,700 in 2011 from $172,600 this year.

(source:blogs.wsj.com)