Pending Home Sales Drop in November

Pending home sales dropped significantly in November, according to a report issued Tuesday by the National Association of Realtors, posting their largest drop on record after several months of positive gains for a closely-watched indicator of housing market activity.

According to the industry group, November pending home sales activity dropped by 16% to a reading of 96.0, compared with the previous month’s reading of 114.3. The drop was much larger than expected by Wall Street, which was looking for a dip of 2% for the indicator for November.

NAR officials said the drop was related to a decrease in sales activity as the original Dec. 1 deadline for the first-time home-buyers tax credit approached. Pending home sales are contracts signed, meaning it could take several months for a home buyer to finance and finish the transaction. A November home buyer may have been too late to qualify for the original deadline.

The U.S. government extended in November the $8,000 tax credit to a new deadline of April 30, in response to industry and consumer pressure. Housing market sales have risen 15.5% from a year ago, which many believe is primarily related to the tax credit.

Lawrence Yun, NAR’s chief economist, said activity was expected to slow in the winter but he expects it to pick up again as the new April deadline approaches.

Regionally, the pending home sales plunged 25.7% in the Northeast, but remain up 14.7% from the same period a year ago. In the South, sales dropped 15% and remain up 14.7% from a year ago.

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