WASHINGTON (ICIS)--US pending home sales fell slightly in August from July, the National Association of Realtors (NAR) said on Thursday, as higher interest rates and rising property prices chilled prospective purchases for the third straight month.
The PHSI also fell in June and July.
A residential property sale is listed as pending when a contract has been signed but the transaction has not been closed and funded with a mortgage loan. A pending sale usually closes within a month or two of contract signing.
The association's pending sales index is seen as a reliable, forward-looking indicator for near-term expectations in the ?xml:namespace>
The index is measured against a 100 baseline set by the NAR in 2001 to represent an average or healthy pace of pending home sale contracts.
NAR chief economist Lawrence Yun said the decline in pending sales for August was in large part due to rising US home mortgage interest rates, real estate price gains and continuing tight lending criteria that deter otherwise eligible home buyers.
Yun indicated that the market for existing home sales is not likely to get much better in the near term or next year.
“Moving forward, we expect lower levels of existing home sales [and] tight inventory will continue to push up home prices in the months ahead,” he said.
The historically low mortgage interest rates and still low home prices that prevailed for about the first half of this year mean that full-year 2013 likely will show an 11% improvement for existing home sales compared with 2012, Yun said.
He expects that US existing home sales will total nearly 5.2m units by the end of this year, but that 2014 will not be nearly so favourable.
As rising prices and interest rates impact the market, Yun said that “little change is seen in 2014, with sales forecast to increase less than 1%”.
The strength of and outlook for the US housing sector is important for the nation’s chemicals and resins producers because residential construction, especially work on new single-family homes, is a major downstream consumer industry for chemistry-based materials and products.
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy