Pending home sales inch up but market remains weak

Pending sales of previously owned U.S. homes unexpectedly rose in September, but the outlook for the housing market remains weak and there are signs consumers have tightened up on spending.

Pending home sales rose 0.2% in September but were still more than 20% lower than they were a year earlier, the National Assn. of Realtors said Tuesday. Wall Street economists had expected pending sales to fall 2.8%.

The Realtors group cautioned that conditions in the housing sector, which has been hit hard by troubles in the sub-prime mortgage market, would not improve for some time.

A sale is considered as pending when a contract has been signed but the transaction has not closed.

Sales usually finalize within one or two months of signing, but the pending sales index has given some false signals. Although it rose in June, existing home sales have been falling since February.

The association said sales of existing homes this year were likely to fall 12.5% from 2006. It said new-home sales looked set to fall 24%, adding that the new-homes market was not likely to see any improvement until 2009.