Those darned bankers are at it again
Pending sales are up again – but hold that champagne.
Here’s the good news. The National Association of Realtors reports its pending-home-sales index jumped 6.4 percent in August. That’s the biggest leap in more than two years.
In fact, it's the first time since the index was created in 2001 that it has been up seven months in a year, the trade group notes.
All that sounds great – that is until you look at the spread between the surge in pending deals the numbers of home sales that actually make it over the finish line and close.
That spread - and it’s a fairly extensive one - points to still unresolved problems, mainly with the banking industry, that is putting somewhat of a damper on the housing market recovery.
Here’s a key stat: While pending sales have risen 19 percent since December, the number of homes actually sold has less than half that, or about 8 percent, NAR reports.
That’s represents a lot of frustrated buyers. Banks are rejecting buyers with decent but not perfect credit, dragging their feet on short sales, the group complains.
Tough new rules on appraisals are also causing some deals to fall through, while almost every major bank is reporting that it is tightening up on its credit standards.
Maybe some of this is just simple prudence after all the reckless lending that took place during the boom years.
But as is often the case in life, when the pendulum swings back, it often overshoots the mark.
With the economy poised to grow again, maybe it’s time for our bankers to loosen up a bit.
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