The number of homes placed under sales contracts tumbled in November from the previous month, presenting fresh evidence that the nascent housing recovery could be poised for a dip in the new year.
The National Assn. of Realtors said Tuesday that its pending home sales index -- a forward-looking indicator based on contracts signed in November -- fell 16% to 96 from an upwardly revised 114.3 in October. But the index still was 15.5% higher than for November 2008, when it was 83.1.
The housing market picked up steam last year as the federal government pushed to lower interest rates, increase loans to first-time buyers from the Federal Housing Administration and provide an $8,000 tax credit for first-time buyers.
But experts fear that a slowdown in buying activity coupled with a possible wave of foreclosures this year could cause the values of homes to drop again.
The data on contracts follow a recent government report that new home sales plunged 11.3% in November.
Experts said the November drop in home contracts and in new home sales reflected a falloff after a surge in activity as buyers rushed into the market to take advantage of the tax credit before its initial expiration Nov. 30.
Congress in November extended that credit through April and expanded it to include a $6,500 incentive for some buyers who already own a home.
But many experts, such as Lawrence Yun, chief economist for the Realtors group, predict the effects of the expansion will be muted or, at best, will not lead to a pickup in sales until spring.
"It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit," he said. "The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own."
Michael Larson, a housing analyst with Weiss Research, was also upbeat.
"Since the period covered in this report, the first-time buyer credit has been expanded and extended," he wrote in a note to clients Tuesday. "We've also seen indicators of unemployment and economic growth stabilize over the past few months. So after we work through this period of housing indigestion, we'll likely see sales rates gradually pick up again and home inventories gradually decline."