After reaching a two-year peak, pending home sales fell in August but are at elevated levels compared with a year ago, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 2.6 percent to 99.2 in August from an upwardly revised 101.9 in July but is 10.7 percent above August 2011, when it was 89.6.
Contract activity in July 2012 was at the highest level since April 2010, when buyers were rushing to beat the deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said some volatility can be expected in the monthly readings. “The performance in month-to-month contract signings has been uneven with ongoing shortages of lower priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year,” Yun said.
“The index shows 16 consecutive months of year-over-year increases, and that has translated into a higher number of closed sales. Year-to-date existing-home sales are 9 percent above the same period last year,” Yun added.
Existing-home sales this year are expected to rise 9 percent to 4.64 million, and gain another 8 percent in 2013 to nearly 5.02 million. With generally balanced inventory conditions in many areas, the median existing-home price is projected to rise about 5 percent in both 2012 and 2013.
Pending home sales in the South slipped 1.1 percent to an index of 110.4 in August but are 13.2 percent above August 2011.
Housing starts are forecast to stay on an uptrend and reach 1.12 million next year, but will remain well below long-term underlying demand with builders facing obstacles in obtaining construction loans.
Growth in the Gross Domestic Product should be 2.5 percent in 2013.
Source: The National Association of Realtors