03 August 2010 17:10 [Source: ICIS news]
May had seen a precipitous 30% fall-off from April after the year-long federal tax credit of $8,000 (€6,080) for home buyers lapsed on 30 April.
NAR’s pending home sales index is based on a benchmark of 100, set for the year 2001 when the index was established.
The index was at 110.9 in April when the effect of the federal stimulus programme was at its peak.
While new home construction is the sector’s principal generator of demand for chemicals, the status of existing home sales is critical because few new residential structures would be built when there is a glut of existing homes on the market.
The June pending home index suggested that it could be many months before the supply of existing homes could be significantly lowered.
A home purchase is listed as a pending sale when a contract has been signed but the transaction has not closed, although the deal usually is completed and funded within a month or two.
The pace of pending home sales is seen as a reliable forward-looking indicator for the housing market.
NAR chief economist Lawrence Yun warned that “there could be a couple of additional months of slow home sales activity before picking up later in the year - provided the job market continues to improve”.
The association noted that through May this year, the
($1 = €0.76)
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