U.S. pending home sales hit one-year low; manufacturing weak

Mon Feb 29, 2016 3:55pm EST
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By Lucia Mutikani

WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes fell to their lowest level in a year in January amid a persistent shortage of properties for sale, which could slow the housing market ahead of the spring selling season.

Other reports on Monday showed factory activity contracting in the Midwest and remaining subdued in Texas this month as the manufacturing sector continued to be buffeted by a strong dollar, weak global demand and spending cuts by energy firms.

But coming on the heels of recent strong data on consumer spending, the labor market, industrial production and durable goods orders, Monday's reports did little to change the view that the economy was regaining momentum after slowing to a 1.0 percent annual rate in the fourth quarter.

"The disappointing data tone points to ongoing weakness in the housing and manufacturing sectors," said Millan Mulraine, deputy chief economist at TD Securities in New York.

"Nevertheless, with underlying domestic fundamentals remaining supportive to growth, the economic recovery should regain its footing in the first quarter."

Growth estimates for the first quarter are above a 2 percent rate.

The National Association of Realtors said its pending home sales index declined 2.5 percent to 106.0 last month, the lowest level since January of last year. The NAR attributed the drop to tight housing inventories, which are limiting choice for potential buyers and pushing up home prices.

A massive snowstorm that blanketed the Northeast region in late January was also blamed for the decline in signed contracts. Economists polled by Reuters had forecast pending home sales rising 0.5 percent last month.   Continued...

A townhouse for sale that is currently under contract is seen in Bethesda, Maryland December 30, 2015. REUTERS/Gary Cameron