March 28. 2012 9:00AM

Housing recovery hits speed bump

  
Contracts to purchase previously owned U.S. homes fell in February, suggesting a loss of momentum in the housing market after recent signs of improvement.

The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed in February, slipped 0.5 percent to 96.5. Signed contracts become sales after a month or two.

However, given that contracts were up 1.5 percent between January and February, there is a chance that home resales could rise again in March, economists said.

Data last week showed sales of previously owned homes fell in February, but remained the second-highest since May 2010. Other reports last week also showed declines in home building activity and new home sales in February.

The U.S. housing market continues to be hobbled by an oversupply of unsold homes, particularly foreclosures, which are depressing prices. Stringent conditions to qualify for a home loan are also an obstacle.

Home prices dropped for the fifth consecutive month in January, reaching their lowest point since the end of 2002.

The average home sold in that month lost 0.8% of its value, compared with a month earlier, and prices were down 3.8% from 12 months earlier, according to the S&P/Case-Shiller home price index of 20 major markets.

Home prices have fallen a whopping 34.4% from the peak set in July, 2006.

Housing market indicators have sent confusing signals so far this year, with existing home sales and new home sales down month-over-month in February, but up year-over-year.

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