Pending Home Sales Fall More

posted on March 7th, 2010 filed under: Real Estate Market Data

The National Association of Realtors reported this week that pending home sales fell again in January.  The NAR’s index, which tracks contract signings for houses, condos and co-ops, fell 7.6% on a seasonally adjusted basis, from December’s revised level of 97.8 to January’s preliminary reading of 90.4.  An index level of 100 represents the number of pending sales in January 2001.

The index started 2009 at 80.5 and climbed to 112.4 in October as the government’s $8,000 tax credit artificially boosted sales last summer and fall.

The NAR’s chief economist blamed the January decline on weather, but the biggest drop occurred in the West.  The South fared least worst, with a month-to-month decline of 2.1%, from 100.2 to 98.1, after ranging in 2009 from 83.1 in January to 114.9 in October.  Data are not broken down by locality, but the real-estate market in Miami and Coral Gables has hardly been immune from national trends.

Bloomberg quoted a Wells Fargo Securities economist as saying:  “When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought.  We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway.  The housing recovery is going to be very, very slow.”

That certainly seems plausible for real estate in Miami and Coral Gables, where the case for buying a home remains weak.  (Prices remain high relative to incomes, historical valuations, and rental costs.)

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