With the public in jitters over the economy, pending home sales have dropped to a record low, even as the cost of housing has become more affordable than ever, according to a new report from the National Association of Realtors.
The Pending Home Sales Index is a forward-looking indicator based on contracts signed in January.
It fell 7.7 percent to 80.4 from December. When the measurement began in 2001, the index was set at 100.
Analysts speculated that some buyers are simply waiting for more details about the recently adopted stimulus package. Signed into law by President Obama in mid-February, the $787 billion bill includes an adopted $8,000 tax credit for first-time homebuyers.
Still, NAR Chief Economist Lawrence Yun said he believes much of the slowdown is attributable to the economy.
"Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," he said in a statement.
NAR's Housing Affordability Index rose 13.6 percentage points in January to 166.8, a new record high. Tracking for that measurement began in 1970.
The affordabiliy index indicates a median-income family, earning $59,800, could afford a home costing $283,400 in January with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest; affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. A year ago, the typical family could afford a home costing $263,300.
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