Pending sales of US homes fall to seven-year low
WASHINGTON - CONTRACTS to buy previously owned homes in the United States hit an all-time low in March, and businesses braced themselves for tough times by squeezing more out of their workers in the first quarter, data released yesterday showed.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in March, fell 1 per cent to 83, the lowest since this index began in 2001. It was 20.1 per cent lower than a year ago.
Economists were expecting the decline in these contracts, which are a good barometer of future home sales, as people have been increasingly hesitant about buying homes in a price-declining market and mortgage financing is more difficult to obtain.
'This is not a shock. The pace of sales seems to be stabilising, but that's the best you could say about it. But I don't think we've hit bottom yet,' said Mr David Wyss, the chief economist at Standard & Poor's in New York.
The home sales data indicated that some buyers are waiting for less restrictive lending policies, said Mr Joseph LaVorgna, chief US economist at Deutsche Bank Securities.
With continued erosion in the housing and mortgage markets, businesses did their part to brace themselves for tough economic times.
US non-farm productivity in the first quarter grew at a faster-than-expected pace, as workers saw the biggest cut in hours since 2003, when the economy was in a jobless recovery, having emerged from its last recession.
Non-farm productivity rose at a 2.2 per cent annual clip, much faster than the 1.5 per cent pace economists were expecting.
But the Labour Department said worker hours fell at a 1.8 per cent rate during the quarter.
The aggressive efforts to cut back on hours worked should help businesses shield their profits and keep wage-related price pressures under control.
Unit labour costs, a gauge of inflation, rose at a 2.2 per cent annual pace, slower than the 2.5 per cent increase analysts were expecting.
'Continued solid productivity gains should help businesses survive the current slowdown,' said Mr Joel Naroff, the president and chief economist at Naroff Economic Advisers in Holland, Pennsylvania.
BYE BUY: 'Home for sale' signs are staying up longer in the US as falling prices and reluctant lenders take their toll on sales. -- PHOTO: AFP
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