Pending Home Resales in U.S. Probably Unchanged in December

By Timothy R. Homan

Feb. 3 (Bloomberg) -- The number of Americans signing contracts to buy previously owned homes was probably unchanged in December, snapping a three-month drop, economists said before a report today.

The National Association of Realtors’ index of pending home resales held at 82.3, a record low, after falling 4 percent in November, according to the median forecast in a Bloomberg Survey of 28 economists.

Record foreclosures are pushing down home values, making homes more affordable for those buyers able to get financing. Still, restrictive lending rules and further price declines are likely to scare away the majority of purchasers, indicating the real-estate recession will persist for a fourth year in 2009.

“Deep discounting from foreclosures has enticed some homebuyers,” said Julia Coronado, a senior U.S. economist at Barclays Capital Inc. in New York. Still, “the economic environment and distressed mortgage market contribute to weak sales.”

The real estate agents’ report is due at 10 a.m. in Washington. Survey estimates range from a drop of 5 percent to a gain of 2 percent.

The Realtors group, whose pending sales data go back to January 2001, started publishing the index in March 2005.

Pending resales are considered a leading indicator because they track contract signings. Closings, which typically occur a month or two later, are tallied in NAR’s monthly existing-home sales report. That report for January is scheduled to be released Feb. 25.

Sales Climbed

Purchases of previously owned homes, which account for about 90 percent of the market, climbed 6.5 percent in December from the prior month as foreclosures helped drive median prices down 15 percent from a year earlier.

December sales of new homes, which account for the remainder, dropped to a record low, a report from the Commerce Department showed last week.

Lower mortgage rates are also making homes more affordable. The rate on a 30-year fixed mortgage averaged 5.33 percent in December, down from 6.09 percent the previous month, according to data from Freddie Mac.

Still, foreclosures continue to mount. Delinquency filings increased 41 percent in December from a year earlier, RealtyTrac Inc., a seller of default data, said last month.

Lower Prices

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. Property values in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, according to a report last week.

The slow pace of sales is hurting companies that supply homebuilders. DuPont Co., the third-biggest U.S. chemical maker, last week reported a fourth-quarter loss of $629 million.

Profit in the Wilmington, Delaware-based company’s safety and protection business fell 62 percent as sales declined for housing products such as Tyvek weather barrier and Corian countertops. The company said it will eliminate 8,000 contractor jobs, twice the target announced in December.

A report from the Commerce Department yesterday showed spending on U.S. private residential construction fell 3.2 percent in December after a 4.1 percent decline the previous month. Last year, spending on home building plummeted a record 27 percent.

                        Bloomberg Survey

===================================
                          Pending
                            Homes
                             MOM%
===================================

Date of Release              02/03
Observation Period            Dec.
-----------------------------------
Median                        0.0%
Average                      -0.2%
High Forecast                 2.0%
Low Forecast                 -5.0%
Number of Participants          28
Previous                     -4.0%
-----------------------------------
4CAST Ltd.                    1.5%
Action Economics              0.6%
Ameriprise Financial Inc     -1.6%
Barclays Capital              1.0%
BMO Capital Markets          -2.0%
Briefing.com                 -0.5%
Commerzbank AG                1.0%
DekaBank                     -0.5%
Deutsche Bank Securities     -5.0%
Dresdner Kleinwort            0.0%
DZ Bank                       0.5%
Fortis                        0.0%
High Frequency Economics     -2.0%
HSBC Markets                 -1.0%
IDEAglobal                   -0.5%
Informa Global Markets        1.0%
ING Financial Markets         2.0%
J.P. Morgan Chase             1.0%
Moody’s Economy.com           1.0%
Ried, Thunberg & Co.         -2.0%
Schneider Foreign Exchang    -0.6%
TD Securities                 1.0%
Thomson Financial/IFR        -1.6%
UBS Securities LLC           -1.0%
University of Maryland        1.0%
WestLB AG                     0.0%
Westpac Banking Co.           2.0%
Wrightson Associates         -2.0%
===================================

To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net