U.S. contracts for pending home sales fell sharply in December to a more than two-year low, pointing to signs of a slowdown in the housing market.
The National Association of Realtors reports signed contracts to buy previously-owned homes dropped 8.7 percent in December from the month of November, widely missing economists’ expectations they would remain unchanged.
The National Association of Realtors said on Thursday its Pending Home Sales Index, based on contracts signed last month, dropped 8.7 percent to 92.4, the lowest level since October 2011. Contracts were 8.8 percent below the December 2012 levels.
Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to remain virtually unchanged.
The National Association of Realtors, scapegoated bad cold weather across the United States last month, which they claim deterred potential buyers.
“Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes or making offers,” said NAR chief economist Lawrence Yun in a statement.
In truth, housing sales have been hurt by a small rise in mortgage rates that have pushed up borrowing costs. A report from the Realtors group last week showed home resales rose modestly in December after three monthly falls in a row.
The National Association of Realtors had their fingerprints all over the 2007 – 2008 financial crisis, which was driven in large part by an abundance of risky, delinquent loans.
But again, the National Association of Realtors called for a loosening of what they term “tight credit” conditions. However, in the month of December, nearly one-half of all home purchase loans had down payments of 5 percent or less, and nearly one-quarter had debt-to-income ratios exceeding 43 percent.ase loans had down payments of 5 percent or less, and nearly one-quarter had debt-to-income ratios exceeding 43 percent.
According to Ed Pinto of AEI, “The homeownership rate, as reported by the US Census Bureau, stands today at 65.3 percent. When adjusted for the millions of homeowners who are seriously delinquent, the rate drops to 62.7 percent. This is virtually unchanged from the rate of 61.9 percent in 1960, notwithstanding a dramatic loosening of lending standards over the last 50-plus years.”