By Bob Willis in Washington email@example.com.
Jan. 6 (Bloomberg) — Fewer Americans signed contracts to buy previously owned homes in November as credit markets seized up and a deteriorating labor market signaled the housing slump will extend into a fourth year.
The index of pending home resales fell 4 percent to 82.3, the lowest level since the series began in 2001, from a revised 85.7 in October, the National Association of Realtors said in a report today in Washington. Pending sales fell in all four regions.
A financial crisis that worsened in the final months of 2008 deepened the economic recession, extending the slump in home sales and prices. President-elect Barack Obama has pledged to enact measures to ease foreclosures and save or create 3 million jobs to boost the economy.
The numbers were “certainly affected by the credit crunch,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, said before the report. “You won’t see home sales bottoming until prices adjust further. We’re no where near the bottom.”
Economists expected pending sales to fall 1 percent after an originally reported drop of 0.7 percent in the prior month, according to the median forecast of 34 economists in a Bloomberg News survey. Estimates ranged from a drop of 5 percent to a gain of 1.5 percent.
Today’s home-sales report showed declines of 7.2 percent in the Northeast, 6.7 percent in the Midwest and 2.4 percent in the West. Pending sales fell 2.2 percent in the South.
The Realtors group, whose pending sales data go back to January 2001, started publishing the index in March 2005. The gauge was down 5.3 percent from November 2007.
Pending resales are considered a leading indicator because they track contract signings. Closings, which typically occur a month or two later, are tallied in the Realtors’ monthly existing-home sales report. That report for November is scheduled to be released Jan. 26.
The financial and credit market collapse that intensified in September stifled a housing market that had been showing some signs of stabilization.
Purchases of previously owned homes, which account for about 90 percent of the market, fell 8.6 percent in November from the prior month and median prices fell 13 percent from a year earlier, the biggest decline on record. November sales of new homes, which account for the remainder, dropped to the lowest level in 17 years.
One in 10 Americans fell behind on mortgage payments or were in foreclosure in the third quarter, the Mortgage Bankers Association reported last month. The share of mortgages 30 days or more overdue and the share of loans already in foreclosure both jumped to all-time highs in a survey that goes back 29 years, the association said.
With the economy gripped by a recession, average house prices have fallen by about a quarter from their peaks in mid- 2006, according to the S&P/Case-Shiller home price index.
Builders are shell-shocked. Lennar Corp., a U.S. home construction company that builds in 14 states, on Dec. 18 reported its seventh straight quarterly loss.
“We’re in the midst of a downward spiral and the momentum is building,” Chief Executive Officer Stuart Miller said on a conference call with analysts.