We knew it was coming, and the Realtors just confirmed it.
The Pending Homes Sales Index fell 1.8 percent in September. This index is based on contracts signed, not closings, so even though the foreclosure robo-signing scandal didn't hit until mid-month, it would be the first indicator of its impact on potential buyers.
“Existing-home sales have shown some improvement but the foreclosure moratorium is likely to cause some disruption and contribute to an uneven sales performance in the months ahead,” writes NAR chief economist Lawrence Yun in the release. "Tight credit and appraisals coming in below a negotiated price continue to constrain the market," he adds, despite what he sees as pent-up demand.
The index is now nearly 25 percent below September of 2009, but that gap is probably wider than it should be because last September first-time home buyers were rushing to get in on the tax credit, which they thought was about to expire. Still, it's real data showing how buyer perception and confidence shifted this September.
The index had been up quite a bit in the past few months, as the effects of the home buyer tax credit's true end began to wear off. We saw the big drop-off in sales in July and then the beginning of a crawl back. Before the robo-signing scandal at several of the big banks, and the ensuing foreclosure freezes, Realtors had said we were "normalizing."
We didn't exactly need this report to tell us what's going on across America.
Buyer traffic is slowing down, according to a recent survey by Credit Suisse. Analyst Dan Oppenheim declared uncertainty in the market, fear of falling prices and the foreclosure mess were "closing the door on any hope for a Fall season."
Earlier this week, when I was in Florida, Realtors and buyers alike told me the foreclosure mess was muddying what were already cloudy waters. Without a clear idea of when the ever-growing shadow inventory will hit the market, no one can gauge where prices will head in the short or long terms.
As we now head into the slowest season in real estate, confidence is weaker than ever. I don't care how much pent-up demand there is out there, (and I can say this because I'm part of that demand) no one wants to catch a falling sword.