The current housing recovery could stall

"The current housing recovery could stall if new construction does not pick up, according to the National Association of Realtors.The NAR saidin its monthly report on Thursday that pending sales of single-family homes, condos and co-ops fell 2.4% in August.Economists had forecast that sales were flat, according to Bloomberg.Because pending sales reflect contract activity, they're a good indicator of how many existing homes will eventually be sold.Pending sales wereexpected to slow in August following a drop in mortgage applications.But there'sthe bigger, nagging problem of inadequate inventorythat has left prospective homebuyers with few choices. "Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract," said Lawrence Yun, the NAR's chief economist. "In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the minuscule number of affordable listings," he said (emphasis added).In other words, people who want to buy homes need to find affordable choices, or else the market could slump.The NAR released a studyearlier in September showing that single-family home construction is lagging job creation and demand in 80% of the metro areas measured. The top metros where construction is urgently needed include New York, Dallas, San Francisco and Miami.Year-on-year, sales were 4% higher. Economists had forecast an increase by 2.6%, not seasonally adjusted.Housing-market data tend to be volatile and subject to revision on a monthly basis.SEE ALSO:UBS: These 6 housing markets around the world are closest to a bubbleJoin the conversation about this storyNOW WATCH: STIGLITZ: It makes me crazy that everyone gets this wrong about the economy
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