The National Association of Realtors’ monthly index of pending home sales reached the lowest level in its history during August, as troubles in the US housing market are clearly continuing to mount. The Pending Home Sales Index fell 6.5 percent to a reading of 85.5 from an upwardly revised 91.4 in July, based on contracts signed in August — 21.5 percent below the August 2006 index of 108.9. The August reading is the worst since January 2001, when the index was first started. In discussing the results, the NAR’s Lawrence Yun noted that 10 percent of sales contracts in August had fallen through because would-be borrowers simply couldn’t obtain a loan. Yun suggested that “some creditworthy people are trying to buy homes but can’t because of the credit crunch.” I’d disagree with his assessment — shocking, I know. For one, lenders’ guidelines are still in the process of tightening and haven’t until perhaps recently become as restrictive as many would like to think (see a recent post discussing this). For another, if 10 percent of people wanting to buy homes couldn’t qualify, that may speak more to the people trying to buy homes and less about the credit market. It’s much easier to say that lending standards are too tight, after all, than it is to suggest that a large percentage of the home-puchasing public may not actually be able to afford such an investment.

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