Pending home sales declined in August as high interest rates, rising prices and restrictive mortgage credit squeezed the market, according to a study released Thursday.
According to the National Association of Realtors’ Pending Home Sales Index, pending sales dropped 1.6% in August to 107.7 from a downwardly revised 109.4 in July. That’s still higher than August 2012’s 101.8; pending sales have increased year-over-year for the past 28 months, according to the NAR.
NAR Chief Economist Lawrence Yun said the decline wasn’t surprising after higher levels of closed existing-home sales at the end of the summer.
“Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month,” he said. “Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead.”
The Pending Home Sales Index fell 1.4% in the Midwest in August, 1.6% in the West and 3.5% in the South. The index rose in the Northeast, increasing 4.0% from July and 5.1% over August 2012.
The NAR forecasts that total existing-home sales will be up about 11% to about 5.2 million this year. The national median existing home price is forecast to rise 11-12% for all of 2013, with price increases slowing to 5-6% next year as inventory improves.