US Pending Home Sales Continue to Plunge

According to the National Association of Realtors, the number of Americans signing contracts to purchase previously owned homes slumped a seasonally adjusted 1 percent during March while the February reading was revised down to -2.8 percent. However, the unadjusted annual figures are far more jarring, as pending sales tumbled 21.7 percent compared with a 18.1 percent drop in February from a year earlier. Clearly, the housing recession is far from over as lending standards remain tight and prices continue to decline. Indeed, even Federal Reserve Chairman Ben Bernanke said on Monday, "…conditions in mortgage markets remain quite difficult, and mortgage delinquencies have climbed steeply…Many foreclosures are not preventable…high rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy.” As a result, downside risks for the US economy loom large, but given persistent gains in energy and food prices, the FOMC is unlikely to cut rates when they meet again in June.

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