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NAR: Pending home sales drop in November
comments (0) January 6th, 2009 in Blogs
Richard Defendorf, contributor
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Job losses and other weaknesses throughout the economy finally dented the National Association of Realtors’ Pending Home Sales Index, which had been relatively stable during most of 2008 but declined 4%, to 82.3, in November from 85.7 in October. The index for November 2007 was 86.9.
The November reading, announced today, is the lowest since 2001, when the index premiered. An index of 100 represents the average level of existing-home-sale contract activity in 2001, based on a national sample of about 20% of transactions nationally. The index is seen as a predictor of transaction closings for the following two months, since finalization of a pending sale typically takes one to two months.
Given current economic conditions and diminished consumer confidence, the index drop in November was expected, NAR’s chief economist, Lawrence Yun said in a press release. Likewise for December. A lot is riding on the Obama administration’s proposed stimulus package, Yun added.
“With a proper real-estate focused stimulus measure, home sales could rise more than expected, by more than 10 percent to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country. Stable home prices will, in turn, lessen foreclosure pressures and lay the foundations for a solid economic recovery as the nation’s 75 million homeowners regain confidence,” Yun said.
Predictions about the fate of the housing market were abundant at the Allied Social Sciences Association’s annual meeting, held over the past few days in San Francisco. Karl Case, an economics professor at Wellesley College and co-author of the Case-Shiller housing price index, says there are at least modest signs of life in the market.
Case told Reuters that states such as Arizona and Florida, where overbuilding is most apparent, are, fortunately, “places where people still want to go.” What’s more, low prices at foreclosure auctions are attracting buyers.
But Richard Curtin, an economist at the University of Michigan and director of its consumer sentiment survey, said a turnaround was unlikely during the next nine months to a year. Too many prospective buyers are still waiting for prices to fall further, credit standards are relatively high, and unemployment continues to rise.
posted in: Blogs, business
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