Pending sales of previously owned homes fell a steeper-than-expected 1.5 percent in December, pointing to more dreary conditions for the beleaguered housing market, a real estate trade group report showed.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in December, dropped to 85.9 from 87.2. Economists were expecting pending home sales--which are a key gauge of future home sales activity-- to fall 1.0 percent.
NAR chief economist Lawrence Yun predicted home sales activity will remain soft through the first half of the year despite a generational low in mortgage interest rates.
Compared to December a year ago, pending home sales were down 24.2 percent.
For all of 2007, the index stood at 96.3, the lowest on record since the Realtor group began tracking this data.
But after a poor year, economists expect the housing market to hit bottom in the first half of this year, particularly as mortgage rates continue to fall and if plans to expand federally insured loan limits are implemented.
"Things aren't strong by any means," said Mark Vitner, economist with Wachovia Securities in Charlotte. "It's possible that we will see some improvement in the housing sector and we
think that the first quarter will mark the bottom in home sales."
U.S. government bond prices turned lower Thursday as stocks mustered a modest recovery, shrugging off the pending home sales data.
The latest report follows other bad news in the housing sector. In late January, the Commerce Department reported that new single-family home sales fell 4.6% in December to its lowest rate in nearly 13 years, while the median sales price dropped sharply and the inventory of unsold homes climbed.