Despite Bad November, NAR Expects Sales Will Rise

The National Association of Realtors expects existing home sales will rise 9.9% in 2010 to 5.71 million units, after falling 12.8% last year. The trade group's updated forecast also calls for a surge in sales this spring as the newly extended and expanded homebuyer tax credit expires on April 30. Homebuyers that sign a sales contract before the end of April will have 60 days to close. NAR economists see sales surging to a seasonally adjusted rate of 6.03 million units in the second quarter before falling back to a 5.45 million rate in 3Q. Despite this optimistic outlook, a leading indicator of future home sales plunged 16% in November after rising nine consecutive months with the help of the first-time homebuyer tax credit. (Due to expire Nov. 30, the tax credit, this fall, was extended by Congress and the White House.) The uncertainty surrounding the tax credit legislation has been cited as a reason for first-time buyers staying on the sidelines. NAR reported that its 'Pending Home Sales' index fell to 96 in November from 114.3 in October. The PHS index is based on newly executed sales contracts with the closing expected to be completed in the next month or two.