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Pending sales fell in January

March 3, 2011 - A measure of signed real estate contracts showed buyers prepping for a relocation in the near future slowed their activity somewhat last month.

The National Association of Realtors reported its pending home sales index dropped 2.8 percent to a reading of 88.9 in January. That was also down 1.5 percent from January 2010, when the federal homebuyer tax credit encouraged more consumers to pack their moving boxes. While pending home sales can normally predict moving activity one or two months in the future, experts said a lower level of signed contracts in January doesn't necessarily mean fewer sales come spring. Distressed properties continue to have an affect on property values, distorting housing growth somewhat.

"While homebuyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system," said Lawrence Yun, the group's chief economist. "We should not expect the recovery to be in a straight upward path – it will zig-zag at times."

Yun added that most economic signs point to a housing recovery.

For instance, recent figures from the Department of Labor showed the volume of workers being laid off from their jobs and applying for unemployment insurance was at an average of 402,000 over the past four weeks, down by 16,500.
 

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