The National Association of Realtors has released its pending home sales index for December. The index reading fell from 100.1 in November to 96.6, a drop of -3.5%. Year-over-year, though, the index is still 5.6% higher than December 2010’s reading.
The pending home sales index measure contracts signed, but not closings. Tighter lending rules from banks, which can disqualify a borrower before the sale is closed, are likely the leading cause of failed contracts.
Lighting a fire under the housing market has been the subject of a number of proposals from President Obama, but none has really made a huge dent in the slow sales growth. Low mortgage interest rates, lower unemployment, and higher consumer confidence should help, but without more willing lenders any boost is likely to be small and short-lived.
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