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Business Title: Pending Sales of Existing Homes in U.S. Increase a More-Than-Estimated 2% The number of Americans signing contracts to buy previously owned homes rose more than forecast in January, indicating the industry that triggered the last recession is improving. The index of pending home resales climbed 2 percent after a 1.9 percent decrease the prior month that was smaller than previously estimated, the National Association of Realtors said today in Washington. The median forecast of 44 economists surveyed by Bloomberg News called for a 1 percent rise. Buyers are returning to the market on the heels of faster job gains for three straight months, falling home prices and record low borrowing costs. At the same time, foreclosures are weighing on property values and construction, slowing the housing recovery. “Affordability is keeping the market afloat,” Sean Incremona, a senior economist at 4Cast Inc. in New York, said before the report. “We’ve seen a bottom for home sales. There’s a gradual upward trend in demand.” Sales were projected to rise after an originally reported drop of 3.5 percent in December, according to the Bloomberg survey. January estimates ranged from a drop of 1.7 percent to an increase of 3.3 percent. Stocks pared losses after the figures. The Standard & Poor’s 500 Index fell 0.5 percent to 1,358.39 at 10:03 a.m. in New York. The yield on the benchmark 10-year Treasury note declined to 1.93 percent from 1.98 percent late on Feb. 24. Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later, and made up more than 90 percent of the housing market last year. Compared with a year earlier, January pending home sales climbed 10.3 percent. Existing-home (ETSLTOTL) sales rose to a 4.57 million annual rate in January, the National Association of Realtors reported last week. While it was the best showing since May 2010, distressed properties made up the largest portion of all purchases since April. The median price fell 2 percent from January 2011. Two of four regions saw an increase in pending home sales, today’s report showed. That included a 7.6 percent gain in the Northeast and a 7.7 percent increase in the South. Pending purchases dropped in the West and Midwest. Toll Brothers Inc. (TOL) and D.R. Horton Inc. are among builders benefiting from job growth as well as cheaper properties and record-low mortgage rates. “We’re optimistic,” Doug Yearley, chief executive officer at Horsham, Pennsylvania-based Toll Brothers, said in a Feb. 22 interview with Bloomberg Television. “We have orders that are up significantly. We’re seeing deposits up, we’re seeing traffic up.” The Realtors group’s measure of whether households earning the median income are able to buy a median-priced property at current interest rates reached record levels in the final three months of 2011, recent data showed. Borrowing costs are also staying low. The average rate on a 30-year fixed loan was little changed at 4.09 percent in the week ended Feb. 17, from 4.08 percent the prior week, according to the Mortgage Bankers Association. It averaged 4.05 percent the week of Feb. 3, its lowest reading in records dating back to 1990. Faster hiring and reduced job cuts may provide a further incentive to home purchases. The unemployment rate in January declined to 8.3 percent, the lowest since February 2009, while the economy generated 243,000 jobs, the most in nine months, Labor Department data showed on Feb. 3. New-home purchases declined 0.9 percent in January to a 321,000 annual rate from a 324,000 pace in December that was stronger than previously reported, the Commerce Department said on Feb. 24. The median price fell 9.6 percent from the same month last year. John C. Williams, president of the Federal Reserve Bank of San Francisco, said last week the housing “bust” is weighing on the economy and monetary stimulus is warranted to boost growth. “Housing is a major factor in the deep downturn and sluggish recovery we’ve experienced in recent years,” Williams said in a speech in New York.
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