Pending Home Sales Inched Up in October
Pending sales of existing U.S. homes rose modestly in October, bucking Wall Street forecasts, but the decline from a year ago was the second largest on record, a real estate trade group said.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in October, was up 0.6 percent to 87.2 from an upwardly revised index of 86.7 in September.
Economists polled by Reuters before the report were expecting pending home sales to decline 1 percent.
The stronger-than-expected data helped U.S. stock prices extend gains in early morning trade.
Year-over-year, pending sales were down 18.4 percent, the second largest drop since the trade group began keeping such records in January 2001. A sale is said to be pending when a
contract has been signed but the sale has not yet closed.
Lawrence Yun, the trade group's chief economist, said home sales and prices should level out next year after this year's declines.
Existing home sales should hit a pace of 5.70 million in 2008 compared to an expected 5.67 million this year, NAR said. It said median home prices would likely fall 1.9 percent this year, but rise 0.3 percent in 2008 to $218,300.
"Certainly, the market has turned .. far worse than I anticipated," Yun said, noting that NAR downwardly revised its homes sales volume several times this year.
Nationally, home prices in 2007 will suffer the first annual decline since the Great Depression, Yun said.
Economists polled by Reuters ahead of the report were expecting pending home sales to decline by 1.0 percent.
The report follows more bad news last week in the housing industry. Although President Bush unveiled his mortgage bailout planThursday, there were numerous signs that the housing slump was going to get worse before it gets better.
Here's a rundown of the latest batch of bad news:
--Home foreclosures rose to record highs in the third quarter, the Mortgage Bankers Association said.
Problems with payments on all loan types drove up the pace of homes entering the foreclosure process, the trade group said in its delinquency and foreclosure survey.
Late payments on mortgages jumped to the highest level since 1986, according to the survey that the group started in 1972.
--Housing markets from Punta Gorda, Florida, to Stockton, California, will crash and suffer price drops of more than 30 percent before the housing crisis is over, a report from Moody's Economy.com said.
On a national level, the housing market recession will continue through early 2009, said the report, co-authored by Mark Zandi, chief economist, and Celia Chen, director of housing economics.
The report paints a worsening picture of the hard-hit housing sector, which is in the midst of its worst downturn since World War II.
-- A senior manager at the world's biggest bond fund criticized a federal mortgage rescue plan as short-sighted and saidU.S. home prices may not hit bottom until 2010.
U.S. home prices may fall as much as 30 percent from the market's peak and likely won't trough until 2009 to 2010, according to Mark Kiesel, a portfolio manager at Pacific Investment Management.
"The question is, do we do it over a period of two to three years, or do we do it in 10?" Kiesel said in an interview. "Japan chose 10, and that didn't work so well."