U.S. pending home sales lose momentum

May 27, 2011 04:10PM

Pending home sales declined in April with regional variations following increases in February and March, according to April’s Pending Home Sales Index, released today by National Association of Realtors. The index, a forecasting indicator for the housing sector based on contract signings on existing homes, declined 11.6 percent to 81.9 in April from a downwardly revised 92.6 in March. The index is 26.5 percent less than the cyclical peak of 111.5, reached in April 2010, when buyers we scurrying to beat the contract deadline for the first time home buyer tax credit, the NAR said. Lawrence Yun, the NAR’s chief economist says the dip in contracts may be due to temporary factors including rising oil price, widespread severe weather with the heaviest precipitation in 20 years and a sudden hike in unemployment claims. He also identifies tight credit as the primary long-term factor hindering the market. The one region that showed gains in the pending home sales index was the Northeast, which gained 1.7 percent to reach 64.5 in April — still 33.4 percent lower than the index a year ago. “Even with very favorable affordability conditions, job growth and a pent-up demand from abnormally low household formation during the past three years, the recovery will continue to be uneven and sluggish given the ongoing credit constraints,” Yun said. TRD