The National Association of Realtors said this morning that pending home sales in August were down 6.5 percent from the month before and fell more than 20 percent from a year earlier. It was a record low for the NAR's index, which began in 2001, the Associated Press says.
The Realtors association said it could see the effects of the credit crunch that came to a head in August, affecting not only subprime borrowers but also those getting so-called "jumbo" loans of more than $417,000. Here's what Lawrence Yun, the NAR's senior economist, says in a statement:
Fewer contracts were being written because of mortgage availability issues, and a separate internal survey of our members shows more than 10 percent of sales contracts fell through at the last moment in August, primarily the result of canceled loan commitments. ... The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked.
Yun says the problem is "less severe" now, “though jumbo loan rates are still higher than they would be under normal conditions."
Investors who supply the money that a variety of lenders use for mortgages are leery of jumbo loans in this new, trickier lending environment, mainly because they no longer feel comfortable with loans that Fannie Mae and Freddie Mac won't buy. That's driven up interest rates.
Because the pending home sales survey is national, there's no data on Maryland. But it's a state with a lot of higher-cost houses.
The Mortgage Bankers Association says about 11 percent of loan applications in Maryland are for jumbo mortgages. Only seven states and the District of Columbia have higher shares.
Edit at noon: Just talked to Walter Molony, a spokesman for the Realtors association, and he said the Baltimore area isn't feeling the jumbo-loan problem keenly. It's not that no local folks are affected -- you can find plenty of pricey homes here -- but the average price of resales is about $325,000, well below the jumbo mark.
The more expensive Washington area, however, is among those markets that took a bigger hit, he said.
"It's been a fairly broad impact in higher-cost areas," Molony said. "We're looking for a gradual improvement in the fourth quarter."