The National Association of Realtors released their pending home sales numbers for September, and things still don’t look good for the housing market.

The Pending Home Sale Index (PHSI) is the National Association of Realtors’ way of measuring and reporting the amount of activity in the housing sector. It is based on the number of signed contracts there are for existing home sales, not closed transactions, and is therefore a “leading indicator of housing activity,” in their words.

September Numbers Down from August

The PHSI numbers for September just came out, putting the number at 84.5: 4.6% lower than August’s numbers, but 6.4% higher than they were in September 2010, according to seasonally adjusted numbers. In unadjusted numbers, the PHSI is down 19.1% from last month and up 7.9% from last year. The numbers, as they typically are, were highest in the West, and lowest in the Northeast — 105.8 in the West compared to 60.6 in the Northeast, seasonally adjusted.

The decline in pending homes sales is disheartening, considering the Federal Reserve’s efforts with Operation Twist, which was designed to stimulate demand for homes by driving long-term interest rates lower. Mortgage rates are currently at record lows, but demand is still dropping off.

“It’s a very strange situation because we have a record high affordability index,” said Lawrence Yun, NAR’s chief economist, on a video interview posted on the NAR’s site. Home prices and interest rates are low, but consumer demand is down.

Confused Federal Policy

Yun also explains that our monetary policy is at odds with regulatory policy. While the Fed is lowering interest rates, the FHA has lowered its loan limits earlier this month — the amount, which varies regionally, up to which the FHA can insure loans. Because fewer mortgages can be federally insured, more home buyers need to apply for “jumbo loans,” and they can’t take advantage of the low rates.

And, Yun points out, underwriters have tightened up their lending criteria, adding another wrinkle to the housing problem.

While it’s too early to call Operation Twist a failure, it’s worth noting that it should have been planned to work in conjunction with other federal housing policy — not against it. Perhaps October’s PHSI numbers will show some evidence of the effects of this self-defeating set of policies.

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  • Deroseneyp

    My nane is not in the mortgage,I make more money than my wife does,her credit score is higher than mine,we current on the mortgage,but can’t do a conventionnal refinancing,in we have been turned down for harp 2 refinancing,reason is that they can’t use my income which is about five times than my wife is,your advise please and thank youuuuuuuu.