Pending sales of existing-homes activity will be dampened near-term as mortgage disruptions continue to impact the housing market, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator, fell 6.5 percent to a reading of 85.5 from an upwardly revised 91.4 in July, based on contracts signed in August. It was 21.5 percent below the August 2006 index of 108.9.
Lawrence Yun, NAR senior economist, says the mortgage market impact is quantifiable.
“Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments,” he said. “The volume of activity we’re seeing today is below sustainable market fundamentals because some creditworthy people are trying to buy homes but can’t because of the credit crunch.”
The impact has been greatest in high-cost markets that are more dependent on jumbo mortgages, Yun says. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked.
“The problem has since become less severe, though jumbo loan rates are
still higher than they would be under normal conditions,” Yun says. “Therefore, sales activity in late fall will better reflect market fundamentals.”