Pending home sales declined in September, reporting a 4.6% drop from August, according to the National Association of Realtors (NAR). The decline brought the NAR’s Pending Home Sales Index to a reading of 84.5. While the index remained 6.4% higher than the previous year, that gap has been consistently shrinking over the past several months.

Lawrence Yun, NAR’s chief economist, mentioned low levels of consumer confidence as part of the problem in a release regarding the numbers, but pinned most of the blame on the recent drop in conforming loan limits and overly restrictive lending standards. Patrick Newport, U.S. economist at IHS Global Insight, disagrees. "Demand is weak because the outlook is weak, and because there’s an overhang of foreclosed homes dragging prices down, so people are reluctant to buy."

The declines hit across all four regions of the country, with the Midwest reporting the largest drop with a 6.2% decline. The Northeast was down 4.7%, the South fell 5.5%, and the West declined 2.1%.

Claire Easley is a senior editor at Builder.

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