Washington: An index that tracks signed contracts to purchase existing homes rebounded in December, as buyers snapped up properties at deep discounts, especially in the U.S. South and Midwest.
It was the second positive sign in the past two weeks for the troubled U.S. housing market, and may indicate that a bottom is forming _ at least for home sales. Analysts, however, caution that prices are likely to keep falling through 2009, and say the outlook for home sales is highly uncertain, especially as layoffs mount.
The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for previously owned homes for December rose 6.3% to 87.7 from an upwardly revised November reading of 82.5, which was lowest month on record. That’s better than the 82.3 reading economists expected, according to a survey by Thomson Reuters.
The reading also was up 2.1% from December 2007.
Typically there is a one- to two-month lag between a contract and a done deal. Home sales that were pending in December are likely to be completed in the coming weeks.
After the stock market crashed last fall, sales of existing homes plunged in October and November, but recovered in December. Tuesday’s pending home sales report indicates January sales data, to be released later this month, may look good too.
Pending home sales increased about 13% in the South and Midwest, but fell almost 4% in the West and about 2% in the Northeast.
The Realtors group, normally known for its optimistic view of the housing market, is now cautioning against getting too enthusiastic about any recovery _ as it lobbies hard for new government tax credits to boost home sales.
“Significant uncertainty still clouds the housing market despite improved affordability conditions,” Lawrence Yun, the group’s chief economist said in a statement. “For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus.”
Of course, the U.S. housing market is still coping with the worst downturn in decades, and much of the country remains weak.
Sales of newly built homes plunged to the slowest pace on record in December and builders posted their worst annual sales results in more than two decades, the government said last week.
On Tuesday, D.R. Horton, the biggest U.S. homebuilder, said it lost almost $63 million in its most recent quarter as sales slumped by half.
Concern about the health of the housing market, which triggered the recession, is driving a plan by Senate Republicans to push down the cost of mortgages. The plan could be included in the economic stimulus bill at the top of President Barack Obama’s agenda.
Republicans on Monday were coalescing behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4% to 4.5%. Mortgage finance companies Fannie Mae and Freddie Mac, which were seized by the federal government in September, would be required to purchase the mortgages once banks have made them to consumers.
Officials said loans to creditworthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans. Republican officials also intended to press for a $15,000 tax credit for homebuyers through the end of the year.