November pending home sales lowest in 7 years

NEW YORK (CNNMoney.com) -- The number of homes under contract to be sold fell 4% in November according to a report released Tuesday.

The Pending Home Sales Index fell to 82.3 for the month of November, to its lowest level since the series began in 2001, according to the National Association of Realtors (NAR). That's a drop from a downwardly revised reading of 85.7 in the month of October.

The November index is 5.3% below the same month a year ago, when the Index stood at 86.9.

"Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November," NAR chief economist Lawrence Yun said in a written statement.

The reading of pending home sales is a forward-looking index that tracks when sales contracts are signed but a deal has yet to be closed. Sales are typically finalized within one or two months of signing the contract.

Even as homebuyers watched home prices fall to record lows, the recession stopped would-be bargain hunters from snatching up new homes.

"December's housing market activity could be comparably lower due to ongoing problems in the economy, so a real estate-focused stimulus plan [from the government] is urgently needed," said Yun.

Mortgage rates: November's pending sales activity does not reflect the 37-year lows that mortgage rates hit in December. The average 30-year, fixed-rate loan declined to 5.1%, with 0.7 up-front points, for the week ending December 31, according to Freddie Mac (FRE, Fortune 500).

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, urged Congress to provide stimulus for the housing market so that home buyers can take advantage of the drastically reduced home mortgage rates.

"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.

NAR expects the 30 year fixed rate to hold fairly steady through the first half of 2009, but then rise slightly in the second half of the year.

Regional breakdown: Pending home sales across all regions were down from October to November. But sales in the West were actually up significantly from November 2007.

The pending home sales index fell 7.2% to 63.2 in the Northeast and stood 14.6% below its November 2007 levels. In the Midwest, the index slipped 6.7% to 74.2 and was down 10.1% year-over-year. In the South month-to-month losses were more modest, with the pending home sales index down 2.2% to 85.3, but it was off 12.7% from a year ago.

In the West, however, while the index was down 2.4% in the month to 101.2, the pending sales jumped 19.3% from November 2007. To top of page

First Published: January 6, 2009: 10:15 AM ET

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