Pending sales of existing homes fell 4% in November

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 per cent 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 on Tuesday 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 housing stress just doesn’t end,” said Ethan Harris, co-head of US economic research at Barclays Capital Inc in New York.

Economists expected November pending sales to fall 1 per cent after an originally reported drop of 0.7 per cent in the prior month, according to the median forecast of 34 economists in a Bloomberg News survey. Estimates ranged from a drop of 5 per cent to a gain of 1.5 per cent.

Tuesday’s home-sales report showed declines of 7.2 per cent in the Northeast, 6.7 per cent in the Midwest and 2.4 per cent in the West. Pending sales fell 2.2 per cent 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 per cent 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 December is scheduled to be released January 26.