Signed contracts to buy existing homes fell for the fifth straight month in October, as the government shutdown added to an overall slowdown in the U.S. housing market. So-called pending home sales eased 0.6 percent from an upwardly revised September reading and are down 1.6 percent from October 2012, according to the National Association of Realtors.
This is the lowest sales pace since December 2012. Pending home sales are an indicator of closed sales in November and December.
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“The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval,” said Lawrence Yun, chief economist for the Realtors in a release.
Regionally, gains in pending home sales in the Northeast and Midwest were stronger, while the South and West saw deeper declines. Sales rose 2.8 percent month-to-month in the Northeast and 1.2 percent in the Midwest. Sales slipped 0.8 percent in the South from September and in the West the decline was steepest, with 4.1 percent fewer buyers signing contracts.
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“We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,” Yun said.
While the Realtors’ survey, which draws its data from regional multiple listing services, showed a big drop in the usually investor-heavy West, another report saw investors returning to the market in October after stepping back earlier in the year. After surging to 23 percent of the market in February, investors made up just 16.6 percent of home buyers in August, according to Campbell/Inside Mortgage Finance. Over the past two months, however, that share has climbed back to 17.4 percent.
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“The two-month rise in investor activity is significant given that it occurred at the same time the proportion of distressed properties in the housing market has continued to fall,” the report said.
—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.