Pending home sales weaker than forecast, held back by Irma

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A gauge of contract signings to purchase previously owned homes was unchanged in September at the lowest level since the start of 2016 as Hurricane Irma depressed sales in the Southeast and a limited number of listings restrained activity elsewhere, according to data released Thursday from the National Association of Realtors in Washington.

The index held (the estimate was a 0.5% gain) at 106 after a 2.8% decline. The gauge dropped 5.4% from September 2016 on unadjusted basis, the biggest year-over-year decrease since April. Contract signings fell in the South and rose in the other three regions.

The data reflect volatility in the wake of Hurricanes Irma and Harvey. While activity in the Houston area has rebounded since Harvey in late August, sales last month were weighed down in the South by Irma, the Realtors group said.

Outside of the storms' effects, the housing market is being hindered by a lack of properties that has driven up prices. Sales of homes listed for less than $250,000 are down from last year, while those at the upper end of the bracket are "up solidly," the NAR said. Nonetheless, steady hiring, easier credit availability and borrowing costs still near historically low levels remain sources of support for the housing recovery.

Economists consider pending sales a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a deal closes, typically a month or two later, and those sales were up in September for the first time in four months.

"While most of the country, except for the South, did see minor gains in contract signings last month, activity is falling further behind last year’s pace because new listings aren't keeping up with what’s being sold," Lawrence Yun, NAR's chief economist, said in a statement.

Purchases rose 1.2% in the Northeast, 1.4% in the Midwest and 1.9% in the West Contract signings dropped 2.3% in the South.

Bloomberg News
Hurricane Irma Hurricane Harvey Purchase Real estate Housing market NAR