Contracts to purchase previously owned U.S. homes dropped off in September despite lower prices and borrowing costs. According to a report from the National Association of Realtors released today in Washington, pending home sales were down 4.6% last month in their biggest one-month decline since April, following a 1.2% drop in August.
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“Sales continue to bump along the bottom,” said Anika Khan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, ahead of the report. “A meaningful recovery in sales will likely not occur until the mountain of foreclosures and pending foreclosures clears.”
Pending home sales declined in all four of the NAR’s four regions, led by a 6.2% drop in the Midwest. “A combination of weak consumer confidence and continuing tight lending criteria held back homebuyers,” said NAR chief economist Lawrence Yun in a statement today.
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Another NAR report issued October 20 showed that sales of previously owned homes, which account for roughly 95% of the market, fell 3% in September, and 18% of real estate agents reported having at least one pending contract canceled last month. According to the NAR, cancellations often reflect mortgage applications that were refused or cases in which appraised home values came in below the contracted sales price. The NAR’s pending sales report tracks contract signings, while previously owned sales reflect the closings, which come a month or two later.