U.S. pending home sales up in November, hint at stabilization 

WASHINGTON Mon Dec 30, 2013 11:59am EST

A view of single family homes for sale in San Marcos, California October 25, 2013.

Credit: Reuters/Mike Blake

(Reuters) - Contracts to purchase previously owned U.S. homes edged up in November, marking the first increase in six months and providing a hopeful sign the sector has begun to stabilize after its momentum was sapped by rising mortgage rates.
The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, rose by 0.2 percent to 101.7. Contracts were 1.6 percent below last November's levels.
Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 1.0 percent.
"We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014," said NAR chief economist Lawrence Yun.
The NAR also pointed out that the soft tone to the end of the year should not obscure the best sales in 7 years, although it said that higher mortgage rates combined with strong house price gains would probably mean more modest growth in 2014.
"Several housing indicators have improved recently and the very modest increase in pending home sales in November is a tentative sign that activity is stabilizing, or perhaps even picking up," said Daniel Silver, an economist at JP Morgan in New York.
Housing sales have been dampened by a rise in mortgage rates as investors anticipated that the Federal Reserve would start to reduce the level of stimulus it provides the U.S. economy as the nation's recovery takes hold.
Mortgage rates have advanced by more than a percentage point since last May to almost 4.5 percent.
The central bank announced earlier this month that it would scale back monthly bond purchases by $10 billion to $75 billion in January and is expected to maintain this moderate pace of tapering over the course of the year.
The move confirmed its confidence in the underlying momentum of the U.S. economy and helped push Wall Street stocks to fresh record highs.
"With home prices continuing to rise, labor markets slowly recovering, and mortgage rates still low from a historical perspective, we expect the housing sector to continue its path toward gradual recovery in the coming year," wrote Gennadiy Goldberg, U.S. strategist with TD Securities.
(Reporting by Alister Bull; Editing by Chizu Nomiyama and Diane Craft)
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