Drop in Home Sales Triggers Fear

Pending sales of homes dropped steeply from October to November, suggesting existing home sales will drop in the following months as well, according to the National Association of Realtors. Although the pending sales index—which tracks contracts signed on existing homes before the sale closes—rose for nine months in a row before dropping in November, the recent decline is stoking fears that another real-estate downturn may occur. Sales dropped from from 114.3 to 96 on the index from October to November. Sales may be nearing what they were at the worst of the financial crisis (83.1), but NAR's chief economist Lawrence Yun remains optimistic. “We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires,” he said. The tax credit—$8,000 from the government for first-time buyers—was supposed to expire November 30, but has been extended to April 30 in hopes of increasing sales.