US Pending Homes Sales Plummet

Fewer Americans than forecast signed contracts to buy previously owned homes in September, the fourth straight month of declines, as rising mortgage rates slowed momentum in the housing market.

The index of pending home sales slumped 5.6 percent, exceeding all estimates in a Bloomberg survey of economists and the biggest drop in more than three years, after a 1.6 percent decrease in August, the National Association of Realtors reported today in Washington. The index fell to the lowest level this year.

Mortgage rates last month reached two-year highs and some homeowners are reluctant to put properties up for sale as they wait for prices to climb, leading to tight inventories. Combined, those forces are pushing some would-be buyers to the sidelines and slowing the pace of recovery in real estate.

“You did get a bit of a shock when mortgage rates went up,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said before the report. “It’s an erratic pace of expansion.”

Another report today showed factory production rose less than forecast in September, indicating manufacturing cooled heading into the budget battle that partially closed the federal government this month. Output at factories rose 0.1 percent after a revised 0.5 percent gain in August that was smaller than initially estimated, according to figures from the Federal Reserve. The median forecast of economists in a Bloomberg survey called for a 0.3 percent September gain.

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell