After reaching a two year peak, pending home sales in the United States fell in August but are still well up on levels a year ago, the latest report from the National Association of Realtors shows.
Its Pending Home Sales Index, a forward looking indicator based on contract signings, fell 2.6% to 99.2 in August from an upwardly revised 101.9 in July but is 10.7% above August 2011 when it was 89.6. The data reflect contracts but not closings.
Contract activity in July 2012 was at the highest level since April 2010 when buyers were rushing to beat the deadline for the home buyer tax credit.
Lawrence Yun , NAR chief economist, said some volatility can be expected in the monthly readings.
‘The performance in month to month contract signings has been uneven with ongoing shortages of lower priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year,’ he explained.
‘The index shows 16 consecutive months of year on year increases, and that has translated into a higher number of closed sales. Year to date existing-home sales are 9% above the same period last year, but sales were relatively flat from 2008 through 2011,’ Yun added.
Existing home sales this year are expected to rise 9% to 4.64 million, and gain another 8% in 2013 to nearly 5.02 million.
Yun said that with generally balanced inventory conditions in many areas, the median existing home price is projected to rise about 5% in both 2012 and 2013.
The PHSI in the Northeast rose 0.9% to 78.2 in August and is 19.9% above August 2011. In the Midwest the index declined 2.6% to 95 in August but is also 19.9% higher than a year ago.
Pending home sales in the South slipped 1.1% to an index of 110.4 in August but are 13.2% above August 2011. With broad inventory shortages in the West, the index fell 7.2% in August to 102.5 and is 4.2% below a year ago.
The NAR says that housing starts are forecast to stay on an uptrend and reach 1.12 million next year, but will remain well below long term underlying demand with builders facing obstacles in obtaining construction loans.
The National Association of Realtors is America’s largest trade association, representing one million members involved in all aspects of the residential and commercial real estate industries.