The housing market continues to stabilize even though the pace of pending home sales slipped by more than analysts had expected in January, according to an industry report released on Monday. The pending home sales index declined 2.8% last month, the National Association of Realtors (NAR) reported. Market analysts had predicted a decline of 2.2%.

NAR chief economist Lawrence Yun said, “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market.” Yun also said, “We should not expect the recovery to be in a straight upward path – it will zig-zag at times.”

By region, pending home sales rose only in the South, up by 1.4% from the previous month but .4% below the level in January 2010. Pending home sales declined 2.4% in the Northeast in January and are 3% lower than they were a year ago. In the West, pending home sales fell 5.2% last month to a level that is .9% lower than the level from January 2010. The Midwest experienced the largest drop in January with a decrease of 7.3% from the previous month - 3.2% lower than in the same month a year ago.

The pending home sales index measures home sales contracts that have not yet gone to closing, and generally reflects home sales that are likely to be completed in the next 60 days.

The NAR reported that January pending home sales were slightly higher than the organization’s 2011 forecast. NAR expects an 8% increase in total existing-home sales for the year if contract activity stays on its present course.

“The broad fundamentals for a housing recovery are developing,” Yun said. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.”

Also, the NAR's existing-home sales data - which reflects sales contracts that have already gone to closing - was released for January last week. Last month's existing-home sales increased 2.7% from the previous month, and was 5.3% above the level in January 2010.



Source:
National Association of Realtors