Contracts to buy homes in the United States reached a new low of 10 months in October, but a strong rebound in activity in the services sector earlier this month suggests some resilience in the economy by the end of this year.
The National Association of Realtors (NAR , for its acronym in English ) said Monday that its index of pending home sales , based on contracts signed last month , down 0.6 percent to 102.1 , the lowest level since December.
It was the fifth consecutive month of declines and the data suggests that home sales could remain at a low level for the rest of the year. These contracts convert to sales in a month or two . Sales of existing homes fell in October for the second consecutive month.
“The data suggests that home sales remain low during year-end and the tightening of financial conditions had a negative impact,” said Yelena Shulyatyeva , economist at BNP Paribas in New York.
Economists, who had expected pending home sales to rise by 1.3 percent in October, said the path of weakness in sales could cause the Federal Reserve to keep its monthly bond purchases 85,000 million at least until early 2014.
The U.S. central bank has focused on housing as a channel to promote growth and accelerate job creation .
The Realtors group said the 16-day partial shutdown of the federal government had delayed the acquisition of potential homebuyers .
According to the NAR , a survey of estate agents found that 17 percent of respondents reported delays in signing contracts because they had to wait for the Internal Revenue Service will verify your income level before they could get the approval of a mortgage.
The Realtors group expected to pick up in the contracts, but warned that the shortage of inventory remains a burden .
” Initial data November seem a little better , and separate data volumes of requests for real estate purchases in mid rose from a very low level,” said Daniel Silver , an economist at JPMorgan in New York.
” The data requests weekly shopping is very volatile, but this may indicate that the activity is being activated to some degree or at least stabilizing,” he added.
Home sales have been pressured by rising mortgage rates.
Although real estate is cooling, the economy seems to have retained some momentum from the third quarter.
In a separate report , the company’s financial information services Markit said that its preliminary purchasing managers index for the services sector rose to 57.1 this month from a record low of 49.6 in October.
This is the first month Markit publishes data on service industries , which has been compiled since October 2009. Readings above 50 indicate expansion in service industries .
The survey of the services sector joins others such as retail sales and nonfarm payrolls , which have painted a reasonably optimistic outlook for the economy early in the fourth quarter.
Economists expect a slowdown in the growth of gross domestic product (GDP ) this quarter to the extent that firms reduce inventories quickly after accumulating reserves in the quarter from July to September .
“With other data showing that the recovery in the labor market continues , and confidence rising again , we expect home sales begin to pick up again in the coming months,” said Jim O’Sullivan , chief economist at U.S. High Frequency Economics in Valhalla , New York.
“For now , yes, the weaker data are a reason for the Fed remains cautious about reducing their incentives ,” he said .
Pending home sales rose in the Northeast and the Midwest United States. In the west , meanwhile, fell 4.1 percent.