USA Today
NEW YORK (AP) — An industry group says pending homes sales increased unexpectedly in April to the highest reading since October, but are still off more than 13% from a year ago.
The National Association of Realtors said Monday that its seasonally adjusted index of pending sales for existing homes rose to 88.2 from a March reading of 83.0, the index’s low. The index stood at 101.5 in April 2007.
Economists polled by Thomson/IFR had predicted the index would remain steady at 83.
A reading of 100 is equal to the average level of activity in 2001, when the index started.
The April index in the West climbed 8.3% from March and is 4% higher than a year ago. In the Midwest, the index jumped 13%, but is still lower than in 2007. The South posted a 4.6% gain, while the Northeast index declined 1.9%.
NAR Chief Economist Lawrence Yun noted that pending sales contracts have ticked up in areas with the largest price declines such as Detroit and Las Vegas.
“Bargain hunters have entered the market en masse,” he said. “Sharp price reductions are leading to a quicker discovery of price equilibrium points.”
Yun forecasts that the median price of an existing home will drop 8.4% in the first half of the year before stabilizing. In 2009, prices will rise 4.4% to $213,900, he predicts.
Existing home sales this year are expected to total 5.40 million and then increase to 5.74 million next year, Yun said.
“We are seeing an acceleration in foreclosures. As foreclosures have taken off, they put pressure on prices. Banks have become more aggressive with sales on homes they have foreclosed,” said Christopher Low, chief economist at FTN Financial in New York.
Low said the pickup in pending home sales could be a sign that the housing market could soon be stabilizing.
“Sales will stabilize in the next few months and that will set the stage for inventories turning to normal sometime next year and maybe even for prices to appreciate a bit,” he said. “For now, prices will continue to fall. There is still an inventory overhang that will take 18 months to work through. The end game of the housing bust is near.”
