Contracts on homes down 3rd month in a row

The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring and summer peak buying season failed to entice new buyers.

The National Association of Realtors said yesterday its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month buyers could qualify for a federal tax credit, which has since expired.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.

The Realtors group said a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed. That means more "pending" sales aren't turning into final sales.

"It is especially troubling given the big August decline in long-term interest rates," said Pierre Ellis, an analyst at Decision Economics.

Homes are the most affordable they've been in decades. Prices have fallen, and long-term mortgage rates are hovering at record lows near 4 percent. -- AP