The Wall Street Journal's Josh Mitchell and Kris Hudson look at the latest pending home sales numbers from the National Association of Realtors which shows a 2.3% decline in September--to the second-lowest reading of the year.

This fell far short of the 1% rise that economists had expected. So what gives? NAR points to low inventory levels, especially on the entry-level side, and some recent stock market volatility.

”The rockiness in the financial markets at the end of the summer and signs of a slowing U.S. economy may be causing some prospective buyers to take a wait-and-see approach,” said Lawrence Yun, the NAR’s chief economist.

On Thursday, Meritage Homes Corp. ... posted a 4% gain in third quarter orders for new homes in comparison with the year-earlier figure, well short of analysts’ expectations. Meritage’s sales deteriorated throughout the quarter ... Meritage Chief Executive Steve Hilton said the builder expects that its October sales will produce a gain of 10% to 15%, but he added that the September decline was enough to hamper Meritage’s results for the fiscal year.

“We expected a much bigger month in September,” Mr. Hilton said on a conference call with investors to discuss the results. “I think our results in September were consistent with what other builders saw in that time period. I’m not sure if it was stock market volatility or what it was that caused buyers to pull back in that month, but it was very disappointing.”

You can check out the NAHB's take on the numbers here, or follow on to the Journal:
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