Pending sales of existing homes will be dampened near term as mortgage disruptions continue to impact the housing market, the National Association of Realtors said Tuesday.
The Pending Home Sales Index, a forward-looking indicator, fell 6.5 percent to 85.5 from an upwardly revised 91.4 in July, based on contracts signed in August. It was 21.5 percent below the August 2006 index of 108.9.
According to Lawrence Yun, NAR senior economist, fewer contracts were written in August because of mortgage availability issues, and more than 10 percent of sales contracts fell through at the last moment -- primarily the result of canceled loan commitments.
“The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch,” he said.
Yun further explained that the impact was greatest in high-cost markets that are more dependent on jumbo mortgages. In some areas of the country, as many as 30 percent of signed contracts fell through in August when the credit crunch problem peaked.
“The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions,” Yun said. “Therefore, sales activity in late fall will better reflect market fundamentals.”
In the West, the index fell 2.7 percent in August to 80.3 and was 27.1 percent below one year ago, while the index in the Midwest fell 2.9 percent to 78.1 -- 18 percent lower than in August 2006.
In the Northeast, the index fell 8.3 percent to 77.3, a figure that is 18.3 percent below a year ago, while the index dropped a full 9.5 percent to 97.8 in the South, 21.3 percent below August 2006.
The NAR represents more than 1.3 million members involved in all aspects of residential and commercial real estate.