WASHINGTON: Pending home sales hit a six-month high in April, data showed on June 3, but falling demand for home loans pointed to ebbing activity in the vital housing market due to the expiration of a popular tax credit for buyers.
Still, analysts believe any slowdown in home sales will be temporary, citing a broadening economic recovery, low mortgage rates and strengthening labor market. Data also showed planned layoffs at US companies drifting back to pre-recession levels.
"We have probably set ourselves up for a lower pace of sales in late summer and fall. Fortunately, the very low mortgage rates -- absent a tax credit -- continue to make housing quite affordable," said Craig Thomas, a senior economist at PNC Financial Services in Pittsburgh.
The National Association of Realtors' Pending Home Sales Index, based on contracts signed in April, increased 6% to 110.9 -- the highest level since October and above expectations of a 5% rise. It was the third straight month of gains.
But applications for loans to buy homes dropped last week for the fourth straight week, holding at 13-year lows, the Mortgage Bankers Association said.The surge in pending home sales, which lead sales of existing home sales by a month or two, reflected a last-minute rush by prospective homeowners to sign contracts before April 30 to qualify for a government homebuyer tax credit. -- Reuters
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