USA Today
WASHINGTON (Reuters) — Pending sales of previously owned homes fell 1% a new low in March, as expected, signaling the housing slump has yet to bottom out even as the spring sell season gets underway.
The National Association of Realtors’ seasonally adjusted index of pending sales for existing homes fell to 83.0 from a downwardly revised February reading of 83.8, the index’s previous low. The index was 20.1% lower than March 2007, when the index stood at 103.9 in March 2007.
A reading of 100 is equal to the average level of sales activity in 2001, when the index started.
Economists were expecting the decline in these contracts, which are a good barometer of future home sales.
NAR forecast that existing home sales to edge up to an annual pace of 5.82 million in the fourth quarter from 4.95 million in the first quarter. For the year, the group estimates sales will total 5.39 million and then increase 6.1% in 2009 to 5.72 million.
It also expects median price to decline 2.4% in 2008 to $213,700 before gaining 4.1% to $222,6000 next year.
Falling home prices and a tight credit environment have pummeled the housing market and sent potential buyers to the sidelines to wait out the slump. So far, there’s been no evidence that the traditionally strong spring selling season is jump-starting any sales activity.
The trade group predicts that existing home sales activity and the economy will pick up in the second half of the year as larger home loans backed by the Federal Housing Administration become more widely available. The FHA recently raised the mortgage limits for loans it guarantees.
“Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” said NAR chief economist Lawrence Yun.
A report Wednesday on mortgages showed that applications rose last week as interest rates again slipped below 6%.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 2 rose 15.6% to 655.4.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 2.6% to 650.8.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.91% from 6.01%.
The MBA’s seasonally adjusted purchase index rose 12.1% to 381.3. The group’s seasonally adjusted index of refinancing applications was up 19.3% to 2,273.8.