US Pending Home Sales Index plunges to 9-year low

| August 3, 2010 | 0 Comments
US Pending Home Sales Index plunges to 9-year low

The National Association of Realtors (NAR) today said its Pending Home Sales Index fell by 18.6% in June on year.

On a monthly basis, the index fell by 2.6% to 75.7 points based on contracts signed in June compared with May.

As a result, the index fell to the lowest level since records began in 2001.

The slump was attributed to the expiration of a Government incentive – which ended on 30 April.

The slump in the US housing market is becoming of particular concern and the end of the Government’s tax credit initiative, which provided up to $8,000 for new buyers and $6,500 for current owners who buy and move into another home, has boosted the housing market over the last few months.

However, as the effect of the tax credit continues to fade over the next few months, sales and activity are expected to dwindle, according to experts.

Commenting on today’s figures, Michael Gapen of Barclays Capital Research, said: “Since the vast majority of pending home sales go to settlement in two to three months, the June reading suggests that some further weakness in existing home sales may be in store.”

In related news today, the Commerce Department revealed consumer spending in the US remained flat in June.

Households in the US continue to be squeezed amid higher unemployment.

Consumer spending, which makes up for more than two-thirds of overall economic activity in the US, was unchanged from May.

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