Home sales sink again
Pending home sales turn lower, according to Realtors, as trade group's forecast pushes back rebound in prices to 2009.
January 8 2008: 10:08 AM EST
NEW YORK (CNNMoney.com) -- Sales contracts to sell existing homes turned lower once again in November, falling more than expected to the third weakest reading on record, according to Tuesday's latest reading on the battered housing market.
And the trade group that published the report has now pushed back its forecast for even a rebound in housing prices until 2009.
The National Association of Realtors' Pending Home Sales Index, which measures the level of sales agreements, fell 2.6 percent to 87.6, turning lower after two months of modest improvement from the record low hit in August. Economists surveyed by Briefing.com had forecast only a 0.8 percent decline.
The latest reading is better only than the pace of sales in August and September, when the meltdown in mortgage markets cut off the availability of mortgage financing for many buyers.
The report suggests that there's more trouble ahead in housing sales going into 2008, despite hopes that the year might see at least a bottoming out of the problems in housing and home building.
It is even worse than the 89.8 reading in September 2001, the month when the terrorist attack shook buyer confidence to that had been the weakest month on record before the current housing downturn.
The Realtors also released their first forecast for sales and the economy through 2009, seeing a 3.1 percent rebound in existing home prices next year. But the trade group now sees existing home prices being flat in 2008, rather than its previous forecast of a narrow 0.3 percent recovery from 2007 levels.
"Consumers continue to wait for additional signs of market stabilization," said Lawrence Yun, chief economist for the Realtors, in the group's prepared statement. "There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase. As a result, the exact timing and the strength of a home sales recovery is a bit uncertain."
The report came the same day that one of the nation's largest builders, KB Home (KBH, Fortune 500), reported a large increase in its quarterly loss. The loss was much worse than forecasts due largely to writedowns in the value of its holdings and the cost of getting out of some land purchase options.
KB Home is not the only builder to be hit by large charges due to the downturn in the housing market. No. 1 builder Lennar (LEN, Fortune 500), as well as No. 2 Centex (CTX, Fortune 500), No. 4 Pulte Homes (PHM, Fortune 500) and No. 6 Hovnanian Enterprises (HOV, Fortune 500), all reported bigger-than-expected losses due to such charges.
While No. 3 builder D.R. Horton (DHI, Fortune 500) reported a smaller-than-expected loss in late November, that followed a quarter with a loss that was much wider than forecast.
In December, luxury home builder Toll Brothers (TOL, Fortune 500) posted its first loss in 22 years as a public company.