Signed contracts to buy homes fall 1.1 per cent in October

WASHINGTON – The number of Americans signing contracts to buy homes fell slightly in October as tight credit and lagging wages remained financial hurdles for would-be homebuyers.

The National Association of Realtors said Wednesday its seasonally adjusted pending home sales index fell 1.1 per cent in the past month to 104.1. The index remains below its 2013 average but is 2.2 per cent higher than last October.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale. The number of contract signings rose in the Northeast but fell in the Midwest, South and Western regions of the U.S.

Pantheon Macroeconomics’ Ian Sheperdson said the latest numbers are “more evidence that the trend in housing market activity is flat, despite the gains in existing home sales in the past couple of months.”

Sales of existing homes rose 1.5 per cent to 5.26 million last month, the briskest pace this year. And in a separate report Wednesday, the Commerce Department said sales of new U.S. homes rose a mild 0.7 per cent in October.

Housing has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading. Harsh winter weather crippled sales at the beginning of 2014, just as rising home prices and essentially flat incomes limited the supply of affordable homes for many Americans.

The realtor group noted Wednesday that the average home price for October was $208,300. Monthly price growth for existing homes has slowed to 5.8 per cent in 2014, levelling off from a rate of 11.5 per cent last year. The group’s chief economist suggests the slower pace will keep affordability in check for prospective homebuyers.

The Realtors estimate that 4.94 million existing homes will be sold this year, down 3 per cent from 5.09 million in 2013. Analysts say sales of roughly 5.5 million existing homes are common in a healthy real estate market.