by Carla Hill
| Pending homes sale declined in September, down 4.6 percent from the month
prior. Lawrence Yun, NAR chief economist, said the housing market is being
excessively constrained. “A combination of weak consumer confidence and
continuing tight lending criteria held back home buyers, even though the private
sector added nearly 2 million net new jobs in the past 12 months,” he said.
The current rate of pending sales is 6.4 percent higher, though, than September of 2010. The largest decline was seen in the Midwest, which fell 6.2 percent for the month. The South and Northeast were a close second and third, falling 5.5 and 4.7, respectively. The West fared the best in pending sales for September, declining only 2.1 percent. Why the declines at all? "America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates,” Yun said. “The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates.” Yun noted the need for higher loan limits. The numbers aren't helped either by the recent declines in consumer confidence. The Conference Board Consumer Confidence Index® reports that while confidence had risen slightly in September, it declined once again in October. It is now at levels seen during the 2008-2009 recession. Says Lynn Franco, Director of The Conference Board Consumer Research Center, "Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers' assessment of present-day conditions did not fare any better. The Present Situation Index posted its sixth consecutive monthly decline, as pessimism about the current economic environment continues to grow." Even more pessimistic was consumer's view of the jobs market. According to the Index, "Those anticipating more jobs in the months ahead edged down to 11.3 percent from 11.9 percent, while those expecting fewer jobs decreased to 27.4 percent from 28.6 percent. The proportion of consumers anticipating an increase in their incomes declined to 10.3 percent from 13.5 percent." The remodeling industry has also seen a decline, according to the most recent National Association of Home Builders' (NAHB) Remodeling Market Index (RMI). "Remodelers report that while many consumers show interest in having remodeling work done, they are slow to commit to projects,” said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. “Consumers are in a ‘wait and see’ mode with regard to current economic conditions.” All three components used to access the market decreased in the third quarter, including major additions, minor addition, and maintenance and repair. Regionally, there is a silver lining to this report, as the Midwest and South both posted remodeling gains. |
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