Pending home sales continue to struggle in the wake of the expiration of the tax credit, but contracts signed and not yet closed are up for the second-consecutive month, rising 4.3% in August to 82.3. Still, sales are down 20.1% from one year ago.
NAR chief economist Lawrence Yun said the latest data is consistent with a gradual improvement in home sales in upcoming months. “Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” he said.
“However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence.”
With mortgage rates scraping at an historical bottom, job growth and consumer confidence are key parts of the housing equation. In addition, many homeowners are reacting to fears that housing prices may not have bottomed.
Even if homeowners would like to sell and trade up, they may not be able to fetch the price needed on their present home.
The Fed has been trying to talk mortgage rates down via lower Treasury yields. A weak economy and the lack of inflation expectations have helped, but 15-year rates below 4% and 30-year rates just above 4% aren't providing the lift that’s needed.
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