Pending home sales dropped 1.8% in September after two months of gains the market made without the homebuyer tax credit, according to the National Association of Realtors.
A sale is listed as pending when the contract has been signed but the transaction has not closed. The NAR pending home sales index slipped to 80.9 in September, and remains 24.9% below the surge to 107.8 a year ago when first-time homebuyers jumped into the market to take advantage of the tax credit. When it expired in April, however, the NAR index slumped 30% in one month.
Since then, the index gained 4.3% in August and 5.2% in July before the September drop.
NAR Chief Economist Lawrence Yun said the still lingering foreclosure sale moratoriums some banks have initiated to sort out procedural problems could disrupt future numbers.
“Nonetheless, there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves. However, tight credit and appraisals coming in below a negotiated price continue to constrain the market,” Yun said.
Pending home sales fell 5.7% in the Midwest, the largest drop for an area. There, pending sales remain 33% below September 2009.
Pending sales dropped 3.5% in the South for September 2010 and 1.7% in the Northeast, according to NAR. Only in the West did pending home sales rise 3.5%.
Yun added that low interest rates, one of the few enticements left on the market could be going up in the years to come.