This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Pending Home Sales Drop 1.6% in August

NEW YORK (TheStreet) -- Contracts signed to purchase previously owned homes declined once again in August, as demand for homes cooled.

The National Association of Realtors said its Pending Home Sales Index fell 1.6% to 107.7 in August from 109.4 in July, although the index was 5.8% above August 2012.

Economists polled by Bloomberg were expecting pending home sales to fall 1% from the previous month.

In July, pending home sales declined 1.3%.

Pending home sales are a leading indicator of existing-home sales activity, as it measures contracts signed during the month. A sale is usually closed within one or two months from the time the contract is signed.

Rising interest rates, a persistent shortage of inventory and rapidly rising prices have cooled demand for homes.

NAR economist Lawrence Yun said the decline was expected after the elevated levels of existing home sales closed at the end of summer.

"Sharply rising mortgage interest rates in the spring motived buyers to make purchase decisions, culminating in a six-and-a-half-year peak for sales that were finalized last month," he said. "Moving forward, we expect lower levels of existing-home sales, but tight inventory in many markets will continue to push up home prices in the months ahead."

According to national real estate brokerage Redfin, 27.9% of homes went under contract within two weeks in August, down from 29% in July and from the rate's peak of 33.7% in April. So the frenzy in the market is waning.

Competition for homes is also declining. In August, 60.5% of offers written by Redfin agents across the country faced bidding wars, down from 63.3% in July and from 63.5% in August 2012.

Pending Home Sales declined the most in the South, dropping 3.5% from the previous month. In the Midwest and the West, it declined by 1.4% and 1.6% respectively.

In the Northeast, pending sales actually rose 4%.

Existing home sales this year could be nearly 5.2 million homes, up about 11% from the previous year. However, sales volume for 2014 is expected to slow, rising about 1%.

Meanwhile prices are likely to continue to rise through 2014 though at a more moderate pace -- NAR predicts another 5% to 6% rise -- because of a shortage of inventory.


-- Written by Shanthi Bharatwaj New York.

>Contact by Email.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DIA $176.81 0.00%
IYR $79.01 0.00%
QQQ $105.52 0.00%
SPY $205.74 0.00%
XHB $36.20 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs