Index That Forecasts Near-Term Home Sales Fell In August
Tuesday, October 2nd 2007, 9:58 am
By: News On 6
WASHINGTON (AP) _ An index that forecasts near-term home sales fell in August to a record low as would-be homebuyers had difficulty getting mortgages.
The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago.
August's reading of 85.5 was below analysts' expectations and the lowest ever for the index, which started in January 2001. Analysts surveyed by Briefing.com had predicted the index would fall by 2 percent from July.
The pending home sales index is designed to predict sales levels over the following two months. An index reading of 100 is equal to the average level of sales activity in 2001, when the index started.
With defaults rising among borrowers with weak credit, lenders have backed off from all but the safest mortgages.
Still, Lawrence Yun, senior economist at the real estate trade group, said August's problems were worst in expensive areas where borrowers have to take out ``jumbo'' home loans above $417,000 that can't be sold to government-sponsored mortgage companies Fannie Mae and Freddie Mac. In those areas, up to 30 percent of signed contracts had fallen through, Yun said.
The trade group's index is based on a sample representing about 20 percent of existing home sales nationwide.
Last week the group said that sales of existing single-family homes dropped by 4.3 percent in August to the lowest point in five years. Sales dropped to 5.5 million units that month, the slowest pace since August 2002.