US pending home sales jump in April

US pending home sales jump in April
By Simone Baribeau in New York
Copyright The Financial Times Limited 2010
Published: June 2 2010 15:55 | Last updated: June 2 2010 15:55
http://www.ft.com/cms/s/0/1d843dee-6e4c-11df-ab79-00144feabdc0.html


Pending home sales in the US jumped 6 per cent in April as homebuyers took advantage of a popular tax credit ahead of its April 30 expiration.

The jump in pending sales, defined as those that have been signed but not closed, came after two months of strong gains, according to data released on Wednesday from the National Association of Realtors. Pending sales are 22.4 per cent higher than their levels a year ago. The north-east saw a particularly strong monthly jump, with sales rising almost 30 per cent in April.

The sales are now close to their cyclical highs of October 2009, just before the initial planned expiry of the homebuyer tax credit. The credit, which was worth up to $8,000, expired at the end of April, but can be used for a home sale that was signed by April 30, as long as it closes before the end of June.

Some analysts worry that the summer will be a repeat of the period after the housing credit was originally scheduled to end. Sales, which had risen more than 30 per cent in a seven-month period, slid almost 20 per cent in 3 months.

“Overall, now that the government’s artificial prop has been removed, it is only a matter of time before the underlying weakness of the housing market becomes uncomfortably clear,” said Paul Dales, an economist for Capital Economics, who expects a “double-dip” in housing activity to start in May.

Housing prices, whose collapse sparked the financial crisis, had shown signs of strengthening amid government supports. But last month, prices extended their declines as the end of the homebuyer credit drew near. Prices, which more than doubled from 2000 to their 2006 high, have subsequently fallen more than 30 per cent, but remain 3 per cent above their cyclical low.

Sales of previously owned homes jumped 7.6 per cent in April, one of its strongest monthly gains on record, according to separate NAR data released earlier this month.