The number of American signing contracts to purchase existing homes in September sank for the fourth month in row as stagnant employment and rising mortgage rates inhibited sales.
The index of pending home sales fell 5.6 percent to 101.6, its lowest level since last December, following a 1.6 percent decline in August, according to the National Association of Realtors (NAR) in Washington. Economists had forecast sales to be unchanged.
"This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014,” said NAR Chief Economist Lawrence Yun in the prepared statement.
Pending home sales track the number of contracts signed in any month. These contracts turn into actual sales and are recorded in the existing home sales figures when the contract closes and ownership of the property changes hands a month or two later
The index has suffered a sharp decline in the past four months as mortgage rates have climbed with the possibility that the Federal Reserve would reduce it monthly $85 billion in Treasury and MBS purchases which are keeping interest rates low. In May the index was at 111.3, a more than six and a half year high.
Though the Fed declined to act at its September 18th FOMC meeting and has said that policy depends on economic data, most analysts now think any change in purchases will not take place until the end of the first quarter next year at the earliest.
Mortgage rates have come down from their two year highs of 4.67 percent last month to 4.16 percent yesterday, according to Bankrate.com, but that is still 76 basis points higher than the low in May of 3.4 percent.
Existing home sales have also slumped recently falling to a 5.29 million annual pace in September after two months at 5.39 million, which was the fastest pace in more than three and a half years.
The nationwide median selling price of an existing home fell to $199,200 in September from $209,700 in August, but that is up from $178,300 a year ago and $165,300 in September 2011.
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