The National Association of Realtors’ Pending Home Sales Index, which is based on contracts signed in November, increased 7.3 percent to 100.1 — the highest level since April 2010 and the expiration of the federal home-buying tax credit. A reading of 100 is considered healthy.
Still, the NAR has cautioned that a growing number of buyers are canceling their contracts at the last minute, making the gauge less reliable. An index of contract closings would be more accurate.
Contract signings usually indicate the direction in which the housing market is headed — there’s a one- to two-month lag between a signed contract and a completed deal.
A sale isn’t final until a mortgage is closed, and many are falling apart before that happens.One third of Realtors say they’ve had at least one contract scuttled in October and November, up from 18 percent in September, according to the NAR.
While Americans are “feeling comfortable with their personal situations and with the house-price trend,” the demand for homes is running into significant obstacles, said Decision Economics analyst Pierre Ellis, including tougher lending standards and bigger required down payments.
While homes are the most affordable they have been in decades, especially those in most metro areas, and long-term mortgage rates are at historic lows, this year will likely be the worst year for new-home sales in history.
Sales of previously occupied homes this year are just barely ahead of 2008 figures, which are the worst on record since 1997.
Americans are holding off buying as the labor market struggles to recover. Lenders are requiring bigger down payments and strong credit scores to qualify for mortgages, making it harder for many Americans to receive the financing they would need to buy a home, but even those with good credit and stable finances are hesitant to buy out of concern home prices will continue to fall.
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