Fewer Americans probably signed contracts to buy previously owned homes in October for a second month, adding to evidence a recovery in housing will take time to develop, economists said before a report today. The National Association of Realtors’ index of pending home resales dropped 1 percent after a 1.8 percent decline the prior month, according to the median forecast of 40 economists surveyed by Bloomberg News. A separate report may show initial claims for jobless benefits rose last week from a two-year low. Housing is backsliding following the expiration of a government tax credit that helped prop up sales earlier this year. Unemployment near 10 percent and foreclosure-driven declines in home prices probably mean a rebound in the industry at the center of the last recession will be years in the making. “Housing markets aren’t even approaching recovery yet,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “With distressed homes waiting in the wings, supply and demand won’t come back into balance anytime in the near future.” The National Association of Realtors’ figures are due at 10 a.m. in Washington. Estimates in the Bloomberg survey ranged from a drop of 4.8 percent to a gain of 3 percent. At 8:30 a.m., the Labor Department may report applications for unemployment benefits rose to 424,000 last week, according to the Bloomberg survey median. Claims fell to 407,000 in the prior week, the lowest level since July 2008, reinforcing evidence the labor market is mending. Fed Outlook Housing is an ongoing concern for Federal Reserve policy makers, who last month announced additional asset purchases to spur growth and reduce unemployment. Their Beige Book report, released yesterday, showed the economy strengthened across much of the U.S. as hiring improved, manufacturing expanded and retailers anticipated a stronger holiday shopping season. “Housing markets remain depressed, with several Districts reporting further weakening during the past six weeks,” the Fed said in the report, which is based on anecdotal information. Pending home sales are considered a leading indicator because they track contract signings. Purchases of previously owned homes are tabulated when a contract closes, typically a month or two later. Sales of existing homes, which now make up about 90 percent of the market, fell more than forecast in October as foreclosure moratoriums and a lack of credit disrupted the market, data from the Realtors group showed last week. In July, sales ran at the weakest pace in records going back a decade. Credit’s Influence The tax credit worth as much as $8,000 required contracts be signed on April 30 and closed by Sept. 30. Many of the closings occurred in May and June because the original incentive called for transactions to be completed by June 30. Companies including Beazer Homes USA Inc., which builds houses for first-time buyers, are cautious about next year. “Sustained high unemployment levels and the overhang of foreclosures make it very difficult to predict when and to what extent the housing market will recover,” Ian McCarthy, chief executive officer of Atlanta-based Beazer, said on a conference call with analysts on Nov. 5. Dwindling purchases are hurting builder shares. The Standard & Poor’s Supercomposite Homebuilder Index, which includes Toll Brothers Inc. and Lennar Corp., has lost 29 percent since reaching a 19-month high on May 3. The broader S&P 500 Index is up 0.3 percent over the same period. House prices also are depressed. The S&P/Case-Shiller index of property values in 20 cities climbed in September from a year earlier by the least since January, figures showed this week. Compared with the prior month, after adjusting for seasonal variations, the gauge dropped by the most since April 2009.

Source