Fewer Americans than forecast signed contracts to buy previously owned homes in January, signaling the housing slump will extend well into a fourth year. The index of pending home resales fell 7.7 percent after a 4.8 percent gain in December, the National Association of Realtors said today in Washington. A lack of credit and record foreclosures that are pushing property values even lower may keep prospective buyers out of the market for much of 2009. President Barack Obama has pledged to keep more Americans in their homes and to create jobs, and Federal Reserve Chairman Ben S. Bernanke today said more should be done to stabilize financial markets. “Demand is falling even with price incentives, which shows consumers are very, very cautious about purchasing homes,” John Herrmann, president of Herrmann Forecasting LLC in Summit, New Jersey, said before the report. “It’s hard to meet the tighter requirements for mortgage loans.” Economists forecast a 3.5 percent drop in pending sales after an originally reported gain of 6.3 percent in December, according to the median forecast of 32 economists in a Bloomberg News survey. Estimates ranged from declines of 0.8 percent to 5 percent. Policy makers should move aggressively even as fiscal deficits soar, Bernanke said in the text of testimony before the Senate today. Leading Gauge Pending resales are considered a leading indicator because they track contract signings. The Realtors’ existing-home sales report tallies closings, which typically occur a month or two later. The pending index was first published in March 2005 and included data going back to January 2001. The group’s index decreased to 80.4 in January, the lowest level since records began. Three of four regions dropped, led by a 13 percent slump in the Northeast and a 12 percent slide in the South. Pending sales increased 2.4 percent in the West. Compared with January 2008, pending sales decreased 6.4 percent. Sales of previously owned homes, which account for about 90 percent of the market, fell in January to the lowest level since 1997, according to the Realtors group. New-home purchases, which make up the rest, plunged to the lowest level since records began in 1963, Commerce Department figures showed. The median price for existing and new houses decreased in January from a year ago, the reports showed. More Affordable Falling prices and lower borrowing costs have brought more homes with reach of buyers. The NAR’s affordability index jumped to 166.8 in January, the highest level since records began in 1970. “Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,” Lawrence Yun, the group’s chief economist, said in a statement. “We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions.” The Standard & Poor’s 500 Supercomposite Homebuilding Index fell 20 percent in the first two months of this year as sales plunged. The index dropped 76 percent over the last three years. Pulte Homes Inc., the largest U.S. homebuilder, last month reported its ninth consecutive quarterly loss. Housing-related companies are also struggling. Home Depot Inc., the largest home-improvement retailer, had a fourth-quarter loss, closed its Expo design unit and is cutting about 7,000 jobs. Still ‘Challenging’ “The home improvement market in 2009 will remain just as challenging as 2008,” Chief Executive Officer Frank Blake said in a statement on Feb. 24. The economy shrank at a 6.2 percent annual rate in the fourth quarter, the most since 1982, revised government figures showed last week. Home construction contracted at a 22 percent pace following a 16 percent decline in the prior quarter. Policy makers are counting on a series of steps to stem the deterioration. Obama last month introduced a plan to help as many as 9 million people restructure mortgages to avoid foreclosures. The Treasury Department is doubling the amount of stock purchases of Fannie Mae and Freddie Mac, the mortgage-finance companies now under government control. Federal Reserve Chairman Ben S. Bernanke last week warned the recession may last into 2010 unless policy makers can stabilize the financial system.

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