Tuesday, March 13 2012
Contracts to buy previously owned homes in the United States neared a two-year high in January, an industry group said on Monday, further evidence the housing market was slowly turning the corner.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, increased 2 percent to 97 points, the highest reading since April 2010. New contracts generally lead sales by a month or two.
Housing data ranging from home building to resales have been relatively upbeat, buttressing other signs of underlying economic strength that should help the recovery better withstand rising gasoline prices and a recession in the euro zone.
The housing market is becoming less of a drag on the economy, and home construction is expected to add to growth this year for the first time since 2005.
“Clearly we had better weather conditions in January that might have helped, but we have a situation where we are seeing a number of housing statistics turn,” said Michael H. Strauss, chief economist at Commonfund in Wilton, Conn. “It suggests housing is going to be an additive to G.D.P. this year.”
December’s index of pending home sales was revised to show a much smaller 1.9 percent drop instead of the previously reported 3.5 percent decline. In January, new contracts were up 8 percent from their year-ago level.
The rise in last month’s index suggested home resales would increase for a second consecutive month in February, and it also bodes well for the spring sales season.
“This spring we expect to see continued forward momentum in the housing market as excess inventory is absorbed and low-cost mortgage debt becomes more prevalent,” said John Tashjian, principal at Centurion Real Estate Partners in New York. “A strong spring housing season will be a critical indicator toward predicting growth in the housing market for 2012.”
The market has been hampered by an oversupply of unsold homes, but the number of both new and previously owned properties for sale has been whittled down in recent months.
However, with the foreclosure tide yet to recede and continuing to depress prices, recovery will take awhile. A report due on Tuesday is expected to show that prices in 20 metropolitan areas tracked by the Standard & Poor’s Case-Shiller fell by 0.5 percent in December after declining by 0.7 percent in November.