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| NAR: Mortgage Disruption May Slow Home Sales |
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(September 5, 2007) --
Existing-home sales are likely to decline in the coming months as mortgage disruptions work their way through the housing market, according to the NATIONAL ASSOCIATION OF REALTORS®' latest reading of its Pending Home Sales Index, a forward-looking indicator of home sales.
The index, based on contracts signed in July, fell 12.2 percent to a reading of 89.9 in July, from the June index of 102.4. It was 16.1 percent lower than July 2006 when it stood at 107.1.
Lawrence Yun, NAR senior economist, says abnormal factors are clouding the horizon. “It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment,” he says. “These temporary problems are primarily with jumbo loans, and there are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing or FHA-insured loans."
While some consumer concerns remain, the housing market has been stabilizing somewhat since mid-August, Yun says. "If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later,” he notes.
The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
— REALTOR® Magazine Online
For more economic news and research reports, visit NAR's Research division at REALTOR.org.
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| Reprinted from REALTOR® Magazine Online (http://www.realtor.org/realtormag), September 5, 2007 with permission of the NATIONAL ASSOCIATION OF REALTORS®. Copyright 2007. All rights reserved. |
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