News
12-07-2006, 04:18 PM
Pending Home Sales Tumble;
Indicating Softening Market
By Jeff Bater
From The Wall Street Journal Online
An index of pending home sales in October tumbled again, suggesting more softening demand for the housing sector.
The National Association of Realtors' index for pending sales of existing homes decreased at a seasonally adjusted annual rate of 1.7% to 107.2 from September's 109.1, the industry group said Monday. Its index, based on signed contracts for used homes, was 13.2% below the level of October 2005.
Although the gauge declined for the eight time in a year, David Lereah, NAR's chief economist, expects a "fairly steady pace" of home sales for the next two months.
Housing Slowdown
Rate of Home-Price Increases Falls To Slowest Pace in Eight Years
Fewer New-Home Sales, But Median Price Rises
"It's important to focus on where the housing market is now -- it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high -- they'll stay that way through 2007," Mr. Lereah said.
"In addition, a temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy, and the number for this year will be the third highest on record," he said.
By region, the index showed a 2.1% decline in the Northeast in October from September -- and a 13.5% decrease since October 2005. It decreased 0.6% in the Midwest -- and was down 15.4% in the 12-month span. The West saw a 2.7% drop -- and a 17.4% decline in the past year. The index for the South fell by 1.7% -- and was 9.3% lower since October 2005.
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.
Last week, the NAR reported sales of existing homes in the U.S. climbed for the first time in eight months during October. The median home price, at $221,000, was 3.5% lower than the level a year earlier, the largest decline on record. The inventory of unsold homes on the market climbed; at the latest selling rate, it would take 7.4 months to clear the backlog; a year earlier, 4.9 months would have been sufficient.
Email your comments to rjeditor@dowjones.com.
Indicating Softening Market
By Jeff Bater
From The Wall Street Journal Online
An index of pending home sales in October tumbled again, suggesting more softening demand for the housing sector.
The National Association of Realtors' index for pending sales of existing homes decreased at a seasonally adjusted annual rate of 1.7% to 107.2 from September's 109.1, the industry group said Monday. Its index, based on signed contracts for used homes, was 13.2% below the level of October 2005.
Although the gauge declined for the eight time in a year, David Lereah, NAR's chief economist, expects a "fairly steady pace" of home sales for the next two months.
Housing Slowdown
Rate of Home-Price Increases Falls To Slowest Pace in Eight Years
Fewer New-Home Sales, But Median Price Rises
"It's important to focus on where the housing market is now -- it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high -- they'll stay that way through 2007," Mr. Lereah said.
"In addition, a temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy, and the number for this year will be the third highest on record," he said.
By region, the index showed a 2.1% decline in the Northeast in October from September -- and a 13.5% decrease since October 2005. It decreased 0.6% in the Midwest -- and was down 15.4% in the 12-month span. The West saw a 2.7% drop -- and a 17.4% decline in the past year. The index for the South fell by 1.7% -- and was 9.3% lower since October 2005.
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.
Last week, the NAR reported sales of existing homes in the U.S. climbed for the first time in eight months during October. The median home price, at $221,000, was 3.5% lower than the level a year earlier, the largest decline on record. The inventory of unsold homes on the market climbed; at the latest selling rate, it would take 7.4 months to clear the backlog; a year earlier, 4.9 months would have been sufficient.
Email your comments to rjeditor@dowjones.com.