06 January 2009 16:58 [Source: ICIS news]
WASHINGTON (ICIS news)--US pending home sales fell in November to their lowest level since the data series was launched in 2001 as the housing sector was pulled down further by job losses and recession, national real estate officials said on Tuesday.
“The current index is the lowest since the series began in 2001,” the association said.
A residential property sale is considered pending when a contract has been signed for purchase of a new or existing home but the transaction has not been closed.
A pending sale usually is completed within a month or two of contract signing, so the association’s pending home sales index is seen as a forward-looking indicator of activity in the key housing sector.
The housing industry, especially new home construction, is a crucial downstream consuming sector for chemicals and plastics.
Lawrence Yun, the association’s chief economist, predicted that pending sales data for December likely will show a further decline as the shrinking economy causes still more job losses and undermines consumer confidence.
The November decline in pending home sales and the outlook for still more bleak numbers in December come despite the fact that mortgage loan interest rates are now at 50-year lows.
NAR president Charles McMillan said the continuing nose-dive in US housing data is further evidence that the economic stimulus plan now being considered by the new 111th US Congress must focus on stimulating the real estate market.
“There can’t be an economic recovery in this country without housing,” McMillan said.
“It’s crucial for Congress and the new administration to move quickly to remove impediments and offer home buyers the incentives they need to tap into today’s historic low mortgage interest rates,” he said.
He urged that Congress broaden a home-buying tax incentive enacted in July last year.
That programme gave first-time home buyers a $7,500 (€5,550) tax credit beginning 1 August and was seen as responsible for a brief spike in pending home sales figures for that month.
However, the tax credit must be repaid to the federal government over time.
McMillan urged Congress to make the $7,500 tax credit available to all home purchasers - not just first-time buyers - and that the repayment obligation be eliminated.
He also urged legislators to raise the limits for loans guaranteed by federal regulators to help spur home buying.
($1 = €0.74)
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