Pending homes sales continued to drift down in September, with the National Association of Realtors (NAR) the Pending Home Sales Index (PHSI) falling 4.6% to 84.5. This follows month-to-month declines of 1.2% in August and 1.3% in July. Since the PHSI is a forward-looking indicator based on contract signings, the September decrease suggests existing home sales are likely to continue their downward trend during the next few months, after a 3.0% drop in September and a cumulative decline of 9.0% since January 2011.
Results were generally consistent across the regions, with the PHSI down 6.2% in the Midwest, 5.5% in the South, 4.7% in the Northeast, and 2.1% in the West.
The NAR suggest that, “… the housing market is being excessively constrained. A combination of weak consumer confidence and continuing tight lending criteria held back buyers …” Consumer confidence has plummeted in recent months, with the October readings of the both Conference Board Consumer Confidence Index and University of Michigan Consumer Sentiment Index falling to levels last seen during the darkest days of the recession in early 2009. Pending a recovery in consumer confidence, existing home sales are likely to show only modest growth over the remainder of 2011.