Pending Sales of Existing U.S. Homes Fall 7.7%, More Than Double Forecasts

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Pending U.S. Home Resales Slump More Than Forecast (Update1)
By Shobhana Chandra


March 3 (Bloomberg) -- Fewer Americans than forecast signed contracts to buy previously owned homes in January as the housing slump deepened at the start of its fourth year.

The index of pending home resales fell 7.7 percent after a 4.8 percent gain in December, the National Association of Realtors said today in Washington.

A lack of credit and record foreclosures that are pushing property values even lower may keep prospective buyers out of the market for much of 2009. President Barack Obama has pledged to keep more Americans in their homes and create jobs, and Federal Reserve Chairman Ben S. Bernanke today said policy makers may need to expand aid to the banking system.

“There are just too many headwinds for homebuyers -- tight credit, mounting job losses and fears of further price declines,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The housing market is showing no sign of a bottom. This could be the story for the first half of this year.”

Economists forecast a 3.5 percent drop in pending sales after an originally reported gain of 6.3 percent in December, according to the median forecast of 32 economists in a Bloomberg News survey. Estimates ranged from declines of 0.8 percent to 5 percent.

Policy makers may need to boost aid to banks beyond the $700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits, Bernanke said in the text of testimony before the Senate today. The chairman last week warned the recession may last into 2010 unless policy makers can stabilize the financial system. ........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=atAM8ptyWEU8&refer=home