US Pending Home Sales Index falls sharply in November

The National Association of Realtors (NAR) today said its Pending Home Sales Index fell sharply by 16% in November to 96.0 from 114.1 in October, ending a nine-month rise.

The NAR attributed the fall on the end of a rush to beat the original expiration of the $8,000 tax credit for first-time buyers. The tax credit had been due to expire on November 30 but has now been extended to April 30.

However, the index is up 15.5% compared with November 2008 when it was at 83.1.

NAR chief economist Lawrence Yun comments: “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own.

“We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires,” added Mr Yun.

However, Joseph Trevisani, chief market analyst, FX Solutions, Ridgewood, New Jersey, was not as positive.

“Pending home sales … gives you a look at December and later existing home sales. We may see a drop in those numbers as we saw in November’s new home sales. This does not bode well for the housing market,” said Mr Trevisani.

The figures will no doubt cause concern in the US since the housing market is one area that is crucial to the recovery of the world’s largest economy.

In the meantime, a separate report from the Commerce Department showed new orders at US factories gained 1.1% in November.

It was the third consecutive monthly increase and the rise beat analysts forecasts and was attributed to gains in demand for business equipment that indicate companies are boosting spending and production.

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