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Pending Home Sales Drop Most In South

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By SHANNON BEHNKEN

The Tampa Tribune

Published: July 9, 2008

TAMPA - TAMPA - With fewer homebuyers in the South signing sales contracts to purchase existing homes in May than in April, the region showed the largest regional drop across the nation, a report released Tuesday said.

The National Association of Realtors said there were 7.1 percent fewer pending sales in the South, bringing the monthly index to a new low for the region, said Mike Larson, an analyst with Weiss Research in Jupiter. It was a disappointment, he said, because "the housing market had a bit of bounce in April because of moves made by the Fed to lower interest rates."

Nationwide, the index fell 4.7 percent after a 7.1 percent gain in April.

Pending resales fell 6 percent in the Midwest, 2.9 percent in the Northeast and 1.3 percent in the West.

The nationwide fall was lower than economists had projected. Larson attributed the declines to overall economic conditions.

"Up until late 2007, early 2008, the housing problem was housing specific," he said. "It was a private recession. Now, household budgets are being squeezed, which hurts housing more."

The pending home resales report is considered a leading indicator because it tracks contract signings - buyers' intent to purchase homes at a future date.

It will be a couple of months before it's clear whether the pending sales turn into actual sales. It typically takes a month or two before pending transactions are completed. The national and local associations of Realtors release existing home sale figures monthly, and the data lags behind by a month. The June report is expected to be released July 24.

The sales report for May showed a bit of good news for the Tampa Bay area. Single-family homes sales in May increased in the Tampa-St. Petersburg-Clearwater metro area by a modest 1 percent, compared with the same month a year ago. But it was noteworthy because it marked the first time sales had increased in nearly two years.

There were 2,270 single-family homes sold in the area in May.

Prices, however, have been falling since January 2007. The median sale price for a single-family home was $176,100 in May, down 16 percent from $209,300 in May 2007.

Moody's Economy.com has projected prices to keep dropping in the Bay area until 2010.

As painful as that might be for sellers, Larson said, it's a necessary step to getting the housing market back on track. In light of Tuesday's pending sales report, sales won't rebound until prices drop further, he said.

"I won't be surprised to see declines in existing sales and prices in the coming months," Larson said.

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken

@tampatrib.com.

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