NEW YORK (Reuters) - Pending sales of previously owned U.S. homes edged up as expected in December, a survey showed on Tuesday, which should help to calm fears of renewed weakness in the troubled housing sector.
KEY POINTS: * The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in December, rose 1.0 percent to 96.6 after falling sharply in November as the boost from the initial tax credit for first-time buyers ebbed. * Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, would rise 1 percent in December. * Compared to December 2008, the index was up 10.9 percent.
The Realtors group said the tax credit was skewing housing data and the market remained on a firm recovery path.
MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK, NEW
“What is important within the pending home sales data is that it is up on a year-over-year basis, which suggests the underlying trend in housing demand is positive. It is also important to be aware of the volatility as the drop in November was clearly a pay back from the original expiration of the first-time home buyer tax credit. It is encouraging we saw a small increase and looking ahead we should see overall home sales increase and probably pretty robustly in spring given the extension and expansion of the tax credit.”
“This provides additional evidence that housing is on the mend. The data on sales, prices, permits and construction seem to be forming a pretty solid bottom here, admittedly at a very low level, but the worst seems to be over for housing.
“Job losses are moderating. Consumers are feeling a little more optimistic and taking a risk on the big ticket purchases, the biggest of which is buying a home. It looks as if housing construction will firm up and start adding to GDP growth instead of subtracting from it.”
TERRY MORRIS, SENIOR VICE PRESIDENT AND SENIOR EQUITY MANAGER,
NATIONAL PENN INVESTORS TRUST COMPANY, READING, PENNSYLVANIA:
“Seems like something of a yawner, and if anything seems like a sign that the tax credit isn’t giving a boost the way the administration had hoped. There could be a delayed reaction to the credit, but I would’ve expected this number to be stronger. It makes you wonder how weak it would have been if we hadn’t had the tax credit.”
“What happened here was we’re having a small rebound after the very weak results we had in November. The level of pending home sales is likely to remain low but the decline in December may not continue going forward. The pending home sales index is the leading indicator of existing home sales.
“The housing recovery is looking pretty wobbly right now, you had a rebound, most activity indicators hit bottom at the beginning of last year and began to rebound, but many of them have begun to lag recently...It suggests that builders are still quite cautious about the outlook, buyers are still quite cautious.
“We still think the housing market’s likely to lag the recovery. I think people will be penciling a small increase in existing home sales when it’s released later this month.
“These are measures of turnover. It’s like volume on the stock market: Just because you have more transactions doesn’t mean you have rising prices.”
MARKET REACTION: STOCKS: U.S. stock indexes slipped modestly. BONDS: U.S. Treasury debt prices were stagnant. DOLLAR: U.S. dollar was little changed.