Post by jeffolie on Sept 5, 2007 14:08:23 GMT -6
US pending home sales plummet by 12%
By Eoin Callan in Washington
Wed Sep 5, 11:36 AM ET
The US housing sector suffered another major blow as demand for homes fell dramatically to a six year low amid the global credit crunch, according to realtors.
Economists had expected pending home sales to fall 2 per cent, but instead they fell 12.2 per cent in July, according to the National Association of Realtors.
The sharp drop shook financial markets and showed that tightening lending conditions are hitting the real economy and may deepen the worst housing downturn in 16 years.
Stocks dropped and the dollar fell nearly 1 per cent against the yen to 115.35, as US government bonds extended their gains.
The benchmark 10-year Treasury note were higher as yields fell to 4.5 per cent.
"The worst fears have been materialized," said Alan Ruskin, an analyst at RBS, predicting further falls ahead.
"The slide was broad-based and very large by any measure, even allowing for mitigating circumstances," he said.
Economists said the data suggested the drop would translate into a at least a 5 per cent fall in sales to an annual rate of 5.5m or lower.
A fall in sales could hit homebuilders and house prices, underlining concerns that the downturn in the sector could begin to weigh on consumer spending and undermine economic growth.
Lawrence Yun, an economist at the National Association of Realtors, said: "It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment."
news.yahoo.com/s/ft/20070905/bs_ft/fto090520071141321813;_ylt=AtkzLJl4kdjSdLFIg77cMzOs0NUE
By Eoin Callan in Washington
Wed Sep 5, 11:36 AM ET
The US housing sector suffered another major blow as demand for homes fell dramatically to a six year low amid the global credit crunch, according to realtors.
Economists had expected pending home sales to fall 2 per cent, but instead they fell 12.2 per cent in July, according to the National Association of Realtors.
The sharp drop shook financial markets and showed that tightening lending conditions are hitting the real economy and may deepen the worst housing downturn in 16 years.
Stocks dropped and the dollar fell nearly 1 per cent against the yen to 115.35, as US government bonds extended their gains.
The benchmark 10-year Treasury note were higher as yields fell to 4.5 per cent.
"The worst fears have been materialized," said Alan Ruskin, an analyst at RBS, predicting further falls ahead.
"The slide was broad-based and very large by any measure, even allowing for mitigating circumstances," he said.
Economists said the data suggested the drop would translate into a at least a 5 per cent fall in sales to an annual rate of 5.5m or lower.
A fall in sales could hit homebuilders and house prices, underlining concerns that the downturn in the sector could begin to weigh on consumer spending and undermine economic growth.
Lawrence Yun, an economist at the National Association of Realtors, said: "It's difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren't closing because mortgage commitments have been falling through at the last moment."
news.yahoo.com/s/ft/20070905/bs_ft/fto090520071141321813;_ylt=AtkzLJl4kdjSdLFIg77cMzOs0NUE