Pending sales of homes rise

Pending sales of existing homes rose above analysts’ expectations in February, data from a real estate trade group showed Tuesday, a signal that the housing sector may be stabilizing.

The National Assn. of Realtors said its Pending Home Sales Index, based on contracts signed in February, rose 0.7% to 109.3 from a downwardly revised 108.5 in January.

Wall Street analysts polled before the report were expecting the trade group’s index to come in at 108.2.

With many market watchers fretting over a shaky mortgage sector, the data offered a welcome sign of stability, said Mario DeRose, a fixed-income strategist with Edward Jones in St. Louis.

“This is a nice surprise that, basically, reduces the chance that we will get a dramatic drop in housing,” he said.

Others still see uncertainty for the housing and mortgage finance sectors.

Higher delinquencies among sub-prime borrowers with damaged credit will put downward pressure on home sales this year, said David Lereah, the National Assn. of Realtors’ chief economist.

“Problems in the sub-prime mortgage market will become more apparent over time, and they will modestly depress the overall level of improvement in existing-home sales we expect as the year progresses,” Lereah said.

Poor weather in February probably helped to flatten Tuesday’s data, but the pending home sales figure has largely held steady since July, he said.

Jon Basile, an economist with Credit Suisse in New York, said the data “give a feel that existing home sales have stabilized because they are higher than the lows of last year. At the very least, housing demand is not getting any worse.”