The number of Americans signing contracts to buy previously owned homes rose in December for a third month, showing the industry that triggered the recession was stabilizing heading into 2011.
The index of pending home resales climbed 2 percent, more than forecast, after a revised 3.1 percent gain the prior month, figures from the National Association of Realtors showed today in Washington. The median estimate in a Bloomberg News survey called for a 1 percent increase.
Low borrowing costs and reduced prices may attract buyers, helping housing steady near levels that Federal Reserve policy makers yesterday said were “depressed.” Mounting foreclosures and unemployment above 9 percent are among reasons why the central bank maintained plans for a second round of stimulus to pump $600 billion into financial markets by June.
“Demand for homes will improve very gradually,” Harm Bandholz, chief U.S. economist at UniCredit Group in New York, said before the report. “The labor market is still quite disappointing.”
Other reports today showed claims for jobless benefits rose more than projected last week, reaching the highest level in three months, and orders for capital equipment like machinery and communications gear climbed in December.
Pending home sales were projected to rise after an originally reported gain of 3.5 percent in November, according to the median of 41 forecasts in the Bloomberg survey. Estimates ranged from a drop of 3.2 percent to an increase of 5.1 percent.
Gain in South
Three of four regions saw an increase, today’s report showed, led by a 12 percent gain in the South. Purchases dropped 13 percent in the West.
From December 2009, pending sales were down 3.6 percent.
Fed officials yesterday voted to complete the second round of monetary stimulus to spur growth and restrain borrowing costs.
The expansion is “continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions,” policy makers said yesterday in a statement. “The housing sector continues to be depressed.”
Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later.
Sales of previously-owned homes, which now make up about 90 percent of the market, jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing costs up even more, data from the Realtors group showed last week. For all of last year, purchases dropped to the lowest level since 1997.
The average rate on a 30-year fixed mortgage was 4.74 percent last week, according to figures from Freddie Mac. The rate reached 4.17 percent in early November, the lowest since records began in 1972.
New-house purchases also rose more than forecast in December, propelled by a record surge in the West as buyers in California may have rushed to qualify for a state tax credit before it expired. For all of 2010, sales fell 14 percent nationally from the prior year to the fewest in records going back to 1963, Commerce Department figures showed yesterday.
The recent improvement in the economy “has not yet resulted in sustained job growth or higher consumer confidence, the two necessary components of any housing recovery,” Jeffrey Mezger, chief executive officer of KB Home, the Los Angeles- based homebuilder that targets first-time buyers, said in a Jan. 7 conference call.
The number of homes getting a foreclosure filing will rise about 20 percent this year, reaching a peak for the housing crisis, said RealtyTrac Inc., an Irvine, California-based data seller.
That’ll put more pressure on prices. The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from the prior year, the biggest 12-month decrease in a year, a report from the group showed this week.
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