Pending home sales continued its downward trend in October, resulting in the fifth consecutive month of decline, according to the National Association of Realtors.
A forward-looking indicator based on contract signings, the Pending Homes Sales Index, was at 102.1, dropping from 0.6% from September’s index at 102.7. It was the lowest level since December 2012.
There are several reasons why the decline may have occurred, but many Realtors believe it was due to the government shutdown, limited inventory and falling affordability.
There were home sale gains in the Northeast and Midwest, but negative sales in the South and West affected the country’s overall home sales. In the Northeast, the PHSI rose 2.8% and is 8.1% higher than a year ago. In the Midwest, index increased 1.2%. Pending home sales in the South dropped 0.8%, making the index 1.5% less than it was a year ago. In the West, the pending home sales index fell 4.1%; down to a 12-month low.
In 2014, the numbers are expected to level out; however, there are some concerns. Another government shutdown could negatively affect the PHSI as well as new mortgage rules to take effect in January. The national median existing-home price for 2013 is likely to be 11% above last year, and then to a 5.0% to 5.5% increase in 2014.