Stormy weather for pending home sales

Washington – Citing “abnormal” late-winter weather, the National Association of Realtors reported that “pending home sales are down and additional declines are expected.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6% to 90.4 from an upwardly revised 97.8 in December, but remains 12.3% higher than January 2009 when it was 80.5, NAR reported today.

Lawrence Yun, NAR chief economist, said weather is likely to impact housing data. “January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit. Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered shopping activity in February,” he said.

“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.”

Regionally, the Pending Home Sales Index:

in the Northeast fell 8.7% to 71.3 in January, 20.5% higher than Jan. 2009;

in the Midwest fell 8.9% to 81.2 but is 11.8%above a year ago;

in the South slipped 2.1% to an index of 98.1, but is 18.0% higher than a year ago;

in the West fell 13.2% to 102.9 but is 1.4% above a year ago.

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