Pending Home Sales Index for February Fell

by Simon Lindsay on General

According to a report from the National Association of Realtors, their Pending Home Sales Index fell by 1.9 percent in February to 84.6 – the lowest since 2001. This index is for “homes under contract for sale”.

Last January, the index was recorded at 86.2, which was already 21.4 percent lower compared to the same period in 2007. Many experts were betting on an index of 85.2 for February but the lower-than-expected index clearly proved that the entire housing industry is still struggling with the negative impact of the subprime meltdown. The steepest decline in pending home sales index was actually recorded last 2001, during the 9/11 attack.

The NAR predicted that existing home sales will decline by just 4.7 percent for the whole year compared to 2007. As for the first quarter of 1007, the Realtors are projecting a 23.1 percent drop versus last year.

For the group, the poor pending home sales can be attributed to the tighter lending guidelines and standards that are currently being imposed as well as the obvious absence of speculative buyers. In addition, the NAR also lowered its projections for GDP growth and non-farm employment growth for both the first quarter and the full year.

Although the outlook is not positive for the first half of the year, the NAR believes that the second half will be better considering the combination of new monetary policies and economic stimulus enactment.

Home buyers are actually waiting for the right market conditions before taking the plunge. Despite the abundance of homes for sale including foreclosed properties, many individuals and families are holding back especially with the weakening dollar. Although this is expected, you should know that many experts believe that the time to buy a home is now. Clearly, market conditions are favoring the buyers and waiting too long might mean losing profit in terms of equity.

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