By Ian McKendry

WASHINGTON (MNI) – Pending homes sales in the United States fell
slightly in August as potential home buyers continue to struggle to get
financing, the National Association of Realtors reported Thursday.

The NAR’s Pending homes sales index fell 1.2% in August to 88.6,
down from 89.7 in July. The index is still 7.7% above the 82.3 level
observed last year.

“We continue to experience a pattern in which financially qualified
home buyers, willing to stay well within their means, are being denied
credit — a factor in elevated levels of contract failures,” NAR Chief
Economist Lawrence Yun said in a statement Thursday.

Pending home sales is a forward looking indicator and is usually a
good predictor of the next months existing-homes sales report, also
reported by NAR. However, in recent months pending home sales have not
translated into existing-home sales as potential buyers struggle to
lock-in financing.

The NAR in a September 21 report said that 18% of their membership
reported at least one contract cancellation in the month of August.

Yun said existing-home sales should be closer to 5.5 million for
the year, but that he is predicting 4.9 million, something he attributed
to tight lending standards.

“The unnecessarily restrictive mortgage underwriting standards are
attenuating the housing recovery and are a risk factor for the overall
economy,” Yun said.

Yun continued, saying because of household formations, rising
rents, and a healthier stock market the buying environment should be
better.

“We need to remove the road blocks to the housing recovery for
people who are trying to take advantage of excellent affordability
conditions,” Yun said.

On a regional basis the “Northeast fell 5.8 percent to 63.6 in
August but is 1.3 percent higher than August 2010. In the Midwest the
index declined 3.7 percent to 76.2 in August but is 8.2 percent above a
year ago. Pending home sales in the South rose 2.6 percent to an index
of 96.9 and are 7.6 percent higher than August 2010. In the West the
index declined 2.4 percent to 108.1 in August but is 10.5 percent above
a year ago.”

The NAR will release their existing-home sales report for September
on October 20 at 10:00 a.m ET.

** Market News International Washington Bureau: 202-371-2121 **

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