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US pending home sales ‘tumble'

Friday, March 05, 2010

New figures from the National Association of realtors shows that the number of property buyers who agreed to purchase a home fell sharply in January.

Record snowstorms in January and February had many Americans shoveling sidewalks and driveways instead of combing through listings for open houses. Partly as a result, an index that tracks sales agreements fell 7.6 percent from December to a seasonally adjusted January reading of 90.4.

It was the lowest reading since last April and a disappointment to economists, who had expected it would rise to 97.6. The weakness, however, was not confined to the wintry Northeast. The biggest month-to-month drop was in the West, where sales fell 13 percent. Sales fell almost 9 percent in the Northeast and Midwest and 2 percent in the South.

The weather isn't the only culprit, wrote Jennifer Lee, an economist with BMO Capital Markets. "The impact of government incentives ... appears to be running out of steam, which is, frankly, a scary thought," she wrote.

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In addition, the Federal Reserve is on track to complete $1.25 trillion in purchases of mortgage-backed securities this month. That has kept interest rates low. The average rate on a 30-year fixed rate loan fell this week to 4.97 percent from 5.05 percent a week earlier, Freddie Mac said Thursday.

Despite lower rates, millions of homeowners are still facing foreclosure and government efforts to help them have largely failed. Droves of people who want to sell or refinance are stuck because their homes are worth less than they paid. Job losses also have led many homeowners to fall behind on their mortgages.

On Thursday, the government said new claims for jobless benefits fell last week in a sign that layoffs may be easing as the economy slowly recovers. The Labor Department said that initial claims for unemployment insurance fell by 29,000 to a seasonally adjusted 469,000.

Still, any improvement in the job market is likely to be slow, as companies are reluctant to add workers. Last week's drop only partly reverses a sharp rise in claims in the previous two weeks.

http://www.msnbc.msn.com

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