Pending home sales slip slightly in August

After hitting a two-year peak, pending home sales fell in August although they remain well above last year's levels. 

Sales, a forward-looking indicator based on contract signings that reflects the direction of the housing market, declined 2.6 percent to 99.2 in August from an upwardly revised 101.9 in July, the National Association of Realtors reported on Thursday. 

August's numbers are still 10.7 percent above August 2011 when it was 89.6. 

Contract activity in July hit the highest level since April 2010 when buyers were rushing to beat the deadline for the home buyer tax credit.

A reading of 100 is considered healthy. 

The index hit rock bottom in June 2010, when it dropped to 75.88 after the tax credit expired.

"The performance in month-to-month contract signings has been uneven with ongoing shortages of lower priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year," said Lawrence Yun, NAR chief economist.

There have been 16 straight months of year-over-year increases, and home sales are up 9 percent through the first eight months of the year, after remaining mostly flat from 2008 through 2011, Yun said.

Existing-home sales this year are expected to rise 9 percent to 4.64 million, and gain another 8 percent in 2013 to nearly 5.02 million, which would put them back within the healthy range. 

With balanced inventory conditions, the median existing-home price is projected to rise about 5 percent this year and next. 

Pending sales rose in the Northeast by 0.9 percent but fell in the other three regions — declining 2.6 percent in the Midwest and 1.1 percent in the South. 

Inventory shortages continued to tug at sales in the West, and the index fell 7.2 percent in August.

The Realtors group is expecting housing starts to stay on an uptrend and reach 1.12 million next year, but will remain well below long-term underlying demand with builders facing obstacles in obtaining construction loans.

Economic growth should be 2.5 percent in 2013, NAR said.