Pending Home Sales Fall in October

Despite a rise in unemployment and falling retail sales, pending home sales remain in a stable range, according to the National Association of Realtors (NAR). NAR's Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September, and is 1.0 percent below October 2007 when it was 89.8.

Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include several Florida and California markets, Providence, R.I.; Lansing, MI; Oklahoma City and Las Vegas.

Regional PHSI

•South: Pending home sales jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.

•Northeast: The index rose 0.6 percent to 68.1, but is 14.1 percent below October 2007.

•Midwest: The index declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.

•West: The index fell 8.7 percent to 103.7, but is 17.4 percent higher than October 2007.

New-home sales for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010, according to NAR estimates — which typically tend to be on the rosier side. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.

'Price projections are challenging in an environment with so many variables and divergent local conditions,' said Lawrence Yun, NAR chief economist. 'The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.'

The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6.0 percent by the end of 2009, and average 6.2 percent in 2010, according to NAR officials. The unemployment rate is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009. Inflation, as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@HomeFinder.com.

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