US Pending Home Sales Index +6.3% In December - NAR

US Pending Home Sales Index +6.3% In December - NAR

By Jeff Bater
Of DOW JONES NEWSWIRES


WASHINGTON (Dow Jones)--A forecasting gauge of home sales unexpectedly increased during December, a realtors' group said.

The National Association of Realtors' index for pending sales of previously owned homes increased 6.3% to 87.7 from 82.5 in November, the industry group said Tuesday.

Private analysts projected pending sales would fall 0.5% during December.

Last week, the NAR reported existing-home sales shot higher in December, spurred by buying of discounted property in distressed markets. Home resales rose 6.5% to a 4.74 million annual rate from 4.45 million in November; 45% of the 4.74 million were distress sales at discounted prices. The median home price dived 15.3% to $175,400 from $207,000 in December 2007 - the largest drop on record.

Lower prices elevated the index for pending sales, the NAR said. "The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month," said Lawrence Yun, chief economist for NAR. "The biggest gains were in areas with the biggest improvements in affordability."

The gauge had gone down 3.7% during November; that's a revision down from a previously estimated 4.0% decline.

The NAR pending sales index, based on signed contracts for previously owned homes, was 2.1% above the level of 85.9 in December 2007.

Despite improved affordability, the housing market needs stimulus, the NAR said. "We need to take additional steps to meaningfully draw down inventory and stabilize home prices," NAR President Charles McMillan said.

In its monthly forecast on the industry, the NAR projected existing-home sales at 5.12 million this year and 5.44 million in 2009. That compares with 4.91 million in 2008.

The median price for an existing home is seen at $192,800 in 2009 and $201,700 in 2010. It was $198,600 in 2008.

A month ago, the NAR forecast 2009 sales at 5.22 million and 2010 sales at 5.58 million. The 2009 median price was projected at $198,100 and the 2010 price at $207,700.

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.

By region, the Northeast decreased 1.7% in December from November; it had gone down 14.5% since December 2007. The Midwest increased 12.8% in December from November; it had gone down 1.2% since December 2007. The South increased 13.0% in December from November; it had gone up 1.6% since December 2007. The West decreased 3.7% in December from November; it had gone up 17.5% since December 2007.



-By Jeff Bater, Dow Jones Newswires; 202-862-9249; jeff.bater@dowjones.com


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(END) Dow Jones Newswires

February 03, 2009 10:03 ET (15:03 GMT)