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US Pending Home Sales Fall to More than 2-Year Lows: NAR

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US Pending Home Sales Fall to More than 2-Year Lows: NAR

Contracts to buy previously-owned US homes fell in February to the lowest level since October 2011, a sign the housing recovery continues to face strong headwinds.

The pending home sales index declined 0.8 percent in February, following a 0.2 percent drop the prior month that was initially reported as a gain, the National Association of Realtors reported today. That was the lowest reading in more than two years. Economists forecast no change in contract activity last month.

Compared to February 2013, pending home sales were down 10.5 percent. That was the biggest annual drop since April 2011.

Pending home sales are a key indicator of US housing activity. They allow economists to forecast the pace of existing home sales, which are based on contract closings.

Total existing home sales are forecast to reach 5 million this year, after hitting nearly 5.1 million in 2013. Housing starts are forecast to rise almost 19 percent in 2014, according to the NAR.

“Contract signings for the past three months have been little changed, implying the market appears to be stabilizing,” said NAR chief economist Lawrence Yun in a statement. “Buyer traffic information from our monthly Realtor survey shows a modest turnaround, and some weather-delayed transactions should close in the spring.”

February marked the eighth consecutive month pending home sales declined, a sign the housing market will need more time to rebound. Unusually cold weather added further complications to the housing recovery, which was already subdued by higher home costs and rising mortgage rates. Since May 2013, interest rates on 30-year fixed-rate mortgages have risen by around 1 percentage point.

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