Pending Home Sales Fell in January

By:: Peter King | March 04, 2010

Pending home sales fell in January, despite expectations of a boost from expanded tax credit, according to new figures from the National Association of Realtors (NAR).

The NAR’s Pending Sales Index was down 7.9 percent for the month, to a seasonally adjusted reading of 90.4. It’s the lowest the index has been in 10 months, since of reading of 85.0 in March 2009, when the market was just coming out of the economic collapse of the previous fall.

Overall, January 2010 pending sales were still up 12.3 percent from one year before, when the index stood at 80.3.

Lawrence Yun, NAR chief economist, termed the figures “much lower than expected.” He predicted sales would remain weak through February, due to unusually harsh weather conditions in much of the country.

“We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”

The NAR report is consistent with figures from the Commerce Department, which recently reported that new home sales fell 11.2 percent in January.

Home prices remained flat during the three-month period from December through February, according to figures released today by private data firm Clear Capital, though posting an annual increase of 5 percent since February 2009.

The report attributed the stagnation in prices to an inflow of short sales on the market and continued supply of REOs (real-estate owned properties), the industry term for foreclosed properties.

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