Pending home sales 'fell off a cliff'

By Les Christie, staff writer


NEW YORK (CNNMoney.com) -- The experts expected home sales to drop once the homebuyer tax credit lapsed at the end of April, but the depth of the decrease was shocking.

According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April. It's even off 15.9% from a year ago when the nation was barely emerging from the recession.

"The pending home sales report is a disaster," said Mike Larson, a real estate analyst for Weiss Research. "Sales fell off a cliff after the tax credit expired. It's the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001."

Lawrence Yun, NAR's chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up.

"If jobs come back as expected, the pace of home sales should pick up later this year," said Yun, "and reach a sustainable level of activity given very favorable affordability conditions."

Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when -- or if -- the job market will ever bounce back.

"We're not creating jobs," said Larson. "The housing problems now are being driven by broad economic problems." To top of page


Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.91%-0.00%
15 yr fixed3.03%-0.00%
5/1 ARM3.45%-0.00%
30 yr refi3.97%-0.00%
15 yr refi3.12%-0.00%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 18,214.42 -10.15 -0.06%
Nasdaq 4,987.89 20.75 0.42%
S&P 500 2,110.74 -3.12 -0.15%
Treasuries 2.02 0.05 2.39%
Data as of 5:59pm ET
Company Price Change % Change
Apple Inc 130.42 1.62 1.26%
Facebook Inc 80.41 0.85 1.07%
Cisco Systems Inc 29.91 0.42 1.42%
Microsoft Corp 44.06 0.06 0.15%
Intel Corp 33.65 -0.30 -0.87%
Data as of 4:00pm ET

Sections

Jet.com contest winner Eric Martin got 100,000 shares of the hot startup by signing up 8,000 people. More

Shu-Ling Garver, once a homeless child in Shanghai, rose to one of the top engineers at Intel. Now her entrepreneurial mission is to get kids excited about engineering. More

Glassdoor recently published its annual list of the highest-rated companies for interns. More