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Pending Home Sales Post Record Drop

Sellers burdened with job losses, low confidence

By Mark Huffman
ConsumerAffairs.com

January 6, 2009

NAR says the Pending Home Sales Index fell to 82.3, the lowest since the index was established in 2001.

"Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November," said Lawrence Yun, NAR chief economist. "December's housing market activity could be comparably lower due to ongoing problems in the economy, so a real estate-focused stimulus plan is urgently needed."

Yun said the outlook will depend heavily on the stimulus package, expected from the new administration and Congress.

"With a proper real-estate focused stimulus measure, home sales could rise more than expected, by more than 10 percent to 5.5 million in 2009, and easily begin to stabilize home prices in many parts of the country. Stable home prices will, in turn, lessen foreclosure pressures and lay the foundations for a solid economic recovery as the nation's 75 million homeowners regain confidence," he said.

Yun held out hope that December would show an improvement, since the impact of mortgage interest rates declining to near 50-year lows in December is not reflected in current data.

The PHSI in the Northeast dropped 7.2 percent to 63.2 in November and is 14.6 percent below a year ago. In the Midwest the index fell 6.7 percent to 74.2 and is 10.1 percent below November 2007. The index in the South declined 2.2 percent to 85.3 in November and is 12.7 percent below a year ago. In the West, the index was down 2.4 percent to 101.2 but remains 19.3 percent higher than November 2007.

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