27 March 2013 18:10 [Source: ICIS news]
WASHINGTON (ICIS)--US pending home sales edged lower in February from January, a key survey said on Wednesday, with the downturn blamed on a lack of available inventory that could further hamper a housing recovery.
The index was at 104.8 in February, the association said, down from the downwardly revised January reading of 105.2.
However, NAR noted that the index is still 8.4% higher than the 96.6 reading seen in February last year, and the measure of near-term home sales has been running ahead of year-ago levels for 22 months.
A residential property sale is listed as pending when a contract has been signed but the transaction has not been closed and funded with a mortgage loan. A pending sale usually closes within a month or two of contract signing.
The association's pending sales index is seen as a reliable, forward-looking indicator for near-term expectations in the ?xml:namespace>
The index is measured against a 100 baseline set by NAR in 2001 to represent an average or healthy pace of pending home sales contracts.
NAR chief economist Lawrence Yun said that limited inventory and continuing tight credit requirements are holding back the housing market.
“Only new home construction can genuinely help relieve the inventory shortage,” he said, “and housing starts need to rise at least 50% from current levels.”
However, as the Commerce Department reported on Tuesday, the pace of US new home construction, also known as housing starts, has been weak and rose by only 0.8% last month.
Yun noted that many housing contractors are small businesses that are having trouble getting construction loans.
As a consequence, he said that the nation’s low housing inventory is restraining what otherwise might be stronger growth.
“The volume of home sales appears to be levelling off with the constrained inventory conditions,” Yun said, “and the levelling of the index means little change is likely in the pace of sales over the next couple of months.”
February’s downturn in pending sales, while minor, comes in the wake of other discouraging housing data.
The US housing sector, especially new home construction, is a key downstream consumer industry for chemicals and resins.Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
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