US Pending Home Sales Reach Nine-Month Low

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The pending home sales index in the U.S. dropped in September, reaching its lowest level since December 2012, due to higher mortgage rates, higher prices and government turmoil, according to the National Association of Realtors. 

The pending home sales index decreased 5.6 percent to 101.6 in September, marking the fourth month of consecutive decreases. The index is based on contract signings and not actual sales, but is a leading indicator of market activity. 

Uncertainty in the market created by the recent government shutdown led to the lesser activity, NAR said.

"Declining housing affordability conditions are likely responsible for the bulk of reduced contract activity," NAR chief economist Lawrence Yun said in the report. "In addition, government and contract workers were on the sidelines with growing insecurity over lawmakers' inability to agree on a budget."

The index is 1.2 percent lower than last year, the first time in 29 months pending home sales weren't higher than the year before, NAR said. Pending homes dropped in all regions of the U.S.

"This tells us to expect lower home sales for the fourth quarter, with a flat trend going into 2014," Mr. Yun said. "Even so, ongoing inventory shortages will continue to lift home prices, though at a slower single-digit growth rate next year."

The national median existing-home price is expected to increase 11 to 11.5 percent for 2013, but moderately increase by five to six percent next year. 

NAR predicted existing home sales this year will be 10 percent higher than 2012.