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US pending home sales flatten out

The association’s Pending Home Sales Index, a forward looking indicator based on contract signings, slipped 0.4% to 104.8 in February from a downwardly revised 105.2 in January, but is 8.4% higher than February 2012 when it was 96.6.
 
NAR said that contract activity has been above year ago levels for the past 22 months and before January, the last time the index showed a higher reading was in April 2010 when it was 110.9, shortly before the deadline for the home buyer tax credit.
Lawrence Yun , NAR chief economist, said limited inventory is holding back the market in many areas.

‘Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels,’ he explained.

‘Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market,’ he added.

The PHSI in the Northeast declined 2.5% to 82.8 in February but is 6.8% above February 2012. In the Midwest the index rose 0.4% to 103.6 in February and is 13.2% higher than a year ago.
 
Pending home sales in the South slipped 0.3% to an index of 118.8 in February but are 12.1% above February 2012. In the West the index increased 0.1% to 101.4 but is 0.8 percent below a year ago.

Yun said that he predicts that existing home sales will rise about 7% in 2013 to approximately five million sales, which is near the current level of activity. ‘The volume of home sales appears to be levelling off with the constrained inventory conditions, and the levelling of the index means little change is likely in the pace of sales over the next couple months,’ he pointed out.

The national median existing home price is forecast to rise nearly 7% this year, while mortgage interest rates should remain historically low, but trend up slowly and reach 4% in the fourth quarter of 2013.

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