After strong gains in Oct and Nov that took the index to the highest since April ’10 when the home buying tax credit was being offered, Dec Pending Home Sales fell 3.5% m/o/m vs expectations of a decline of 1.0%. The fall was led by an 11% drop in the West and followed by declines in the Northeast and South while the Midwest saw a 4% jump. Bottom line, while we’ve seen a general improvement, helped by investor demand, there still remains some difficulty in converting these contract signings into closings because of still tough mortgage requirements and differences between appraisals and the agreed upon sale price of a home. This said, housing still seems to be bottoming out but a healthy, sustainable pace of improvement may still be a few years away.
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