Pending home resales rise in April
Unexpected 6.3% jump signals falling prices may break logjam
WASHINGTON - The number of Americans signing contracts to buy existing homes unexpectedly rose as the first national drop in prices since the 1930s lured buyers back into the market in the West, Midwest, and South.
The index of pending home resales jumped 6.3 percent in April, the most since 2001, after a 1 percent drop in March, the National Association of Realtors said yesterday. The March reading was the lowest level since the NAR started keeping records eight years ago.
The figures may be a sign that the glut of 5 million unsold properties may be on the way down, which economists say is a prerequisite for stabilization in the industry. Federal Reserve chairman Ben S. Bernanke warned last week that the economy will remain in danger of weakening further until housing reaches a bottom
"We are seeing sales picking up notably where prices are coming down," said Lawrence Yun, chief economist of the realtors' group. "The first necessary thing is for sales to rise" and the new data is a step in the right direction, he said.
Economists projected the index would fall 0.4 percent, according to the median forecast in a Bloomberg News survey of 32 economists. Estimates ranged from minus 1.5 percent to plus 1 percent.
"There are some signs that sales are close to a bottom, although the level of inventories is so high that there is going to be continued pressure on prices and housing starts," said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Conn., who had the highest forecast in the Bloomberg News survey. "We'll need to see more than this report to suggest housing is really rebounding."
Pending resales were still down 13 percent from April 2007, yesterday's report showed.
The measure increased 13 percent in the Midwest and 8.3 percent in the West. Pending resales rose 4.6 percent in the South and decreased 1.9 percent in the Northeast.
The pending resales measure is considered a leading indicator because it tracks contract signings. The existing-home sales report reflects closings, which typically occur a month or two later.
Purchases in April dropped to a 4.89 million annual pace, matching the weakest rate since records began. It would take an all-time high of 11.2 months to sell all the houses on the market at the current sales pace.
