Pending U.S. home sales decline in January

February 28, 2011 03:15PM

Pending U.S. home sales declined 2.8 percent based on contracts signed in January, according to the National Association of Realtors’ Pending Home Sales Index, a forward-looking indicator. The index is 1.5 percent below last month, when a tax credit stimulus was in place. “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” said Lawrence Yun, NAR’s chief economist. “While homebuyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system. We should not expect the recovery to be in a straight upward path — it will zig-zag at times.” The pace of January existing home sales, 5.36 million, is slightly higher than NAR’s annual forecast for 2011. If contract activity stays on its present course, there should be an 8 percent increase in total existing home sales this year, Yun added. “The broad fundamentals for a housing recovery are developing,” he said. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.” TRD