Pending Home Sales Decline
After Two Months of Increases
by Jeff Bater
From The Wall Street Journal Online
January 08, 2008
A forward-looking indicator of existing-home sales fell in November, after two months of increase.
The National Association of Realtors' index for pending sales of previously owned homes decreased at a seasonally adjusted annual rate of 2.6% to 87.6 in November from October's 89.9, the industry group said Tuesday. The level of the gauge was 86.7 in September, 85.5 in August and 91.4 during July.
NAR chief economist Lawrence Yun said sales of used homes should recover later in 2008. He said consumers are waiting for signs of market stabilization. "The exact timing and the strength of a home sales recovery is a bit uncertain," Mr. Yun said. "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."
In its monthly forecast on the industry, the NAR projected existing-home sales at 5.65 million in 2007, 5.70 million in 2008, and 5.91 million in 2009. That compares with 6.48 million in 2006. Existing-home prices are expected to decline 1.9% to a median of $217,600 for all of 2007 and hold in 2008 at that level, then climb 3.1% to $224,400 in 2009, the NAR said.
A month ago, NAR projected 2007 sales at 5.67 million and 2008 sales at 5.70 million. It had forecast prices declining 1.9% to a median of $217,600 for all of 2007 and to climb 0.3% in 2008 to $218,300.
The NAR pending sales index, based on signed contracts for previously owned homes, was 19.2% below the level of 108.4 in November 2006.
The NAR's pending home sales index was designed to try measuring which way the housing market is going in the future. It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.
By region, the Northeast decreased 13.0% in November from October; it fell 19.1% since November 2006. The Midwest slid 4.1% in November from October; it fell 18.6% since November 2006. The South increased 2.3% in November from October; it fell 19.8% since November 2006. The West decreased 2.1% in November from October; it dropped 18.5% since November 2006.
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