The National Association of Realtors' Pending Home Sales Index (PHSI) took a turn downward in August, falling 1.2% to 88.6 from 89.7 in July but remained 7.7% ahead of August 2010.
The Realtor group said the decline was due to "mixed" regional results, driven down by a decline in the Northeast, where a hurricane knocked out the last weekend of the month for home shoppers. However, the West and Midwest also showed declines. The drop was less than the 2% decline expected by Wall Street.
The decline in the PHSI is likely to translate into declines in existing home sales, primarily in September and October.
Pending sales in the Northeast fell 5.8% to and index reading of 63.6 in August, 1.3% higher than August 2010. In the Midwest the index dropped 3.7% to 76.2, 8.2% above a year earlier.The index in the South rose 2.6% to 96.9, 7.6% higher than August 2010. The West index declined 2.4% to 108.1 but was10.5 percent above a year ago.
"The biggest monthly decline was in the Northeast, which was significantly disrupted by Hurricane Irene in the closing weekend of August," said Lawrence Yun, NAR's chief economist. "But broadly speaking, contract signing activity has been holding in a narrow range for many months."
The Realtors are increasingly blaming banks for tight lending standards.Said Yun, "We continue to experience a pattern in which financially qualified home buyers, willing to stay well within their means, are being denied credit a factor in elevated levels of contract failures. Based on the improving fundamentals of population growth, some job additions, rent increases and higher stock market wealth, we should be seeing existing-home sales closer to 5.5 million, but are expecting just over 4.9 million this year. The unnecessarily restrictive mortgage underwriting standards are attenuating the housing recovery and are a risk factor for the overall economy."
Yun also alleged that jumbo mortgage rates were being driven up by "a lack of competition in the banking industry."