Pending home sales rise in February
Lured by low rates, deep discounts, buyers creeping back into market
updated 16 minutes ago
WASHINGTON - An index that tracks signed contracts to purchase previously occupied homes rose in February from a record low a month earlier as U.S. buyers took advantage of deeply discounted prices and low interest rates.
The National Association of Realtors said Wednesday said its seasonally adjusted index of pending sales for previously occupied homes rose 2.1 percent — in line with expectations — to 82.1 in February from January's record low of 80.4.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales.
Because of falling home prices and mortgage rates, homeownership is more affordable than it's been since at least 1970, the trade group said.
Hopes have been growing that home sales, while still severely depressed, may be finally showing signs of life. Sales of existing home sales rose 5.1 percent in February, the largest increase in nearly six years.
Prices, however, are expected to keep falling for at least another year. Tens of thousands of homes are tied up in the foreclosure process and not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.
The Realtors estimate that 45 percent of existing home sales are now foreclosures and other distressed properties.
Many in the real estate industry are counting on an $8,000 tax credit for first-time homebuyers as their best hope for boosting flagging sales. That incentive was included in the economic stimulus package signed by President Barack Obama earlier this year.
"We expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory," Lawrence Yun, the trade group's chief economist, said in a statement. "Under these conditions, we should see price stabilization in most markets by the end of the year."