Drop in Pending Home Sales Called a Relief

Economist says the weaker-than-expected report could have been much worse

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The National Association of Realtors said Friday that pending home sales fell in September after posting a strong gain the previous month.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, declined 4.6 percent to 89.2 from an upwardly revised reading of 93.5 in August, but is 1.6 percent higher than September 2007 when it stood at 87.8.

Although the monthly decline was steeper than expected, Ian Shepherdson, chief US economist with High Frequency Economics, called the figures a relief in a report of his own.

We are quite relieved by this number. The August index jumped 7.5% so we expected a big drop, partly as a correction to August- the data are very volatile -and partly as a result of the chaos in the markets, which we thought would deter some would-be buyers….Completed sales will surely dip in Sep, and we are concerned about Oct/Nov, but this report could have been a great deal worse.