US pending home sales unexpectedly rise

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WASHINGTON, Dec 11 (Reuters): Pending sales of existing US homes rose modestly in October, bucking Wall Street forecasts, but the decline from a year ago was the third largest on record, a reminder of how far the housing market has fallen.
The National Association of Realtors said yesterday its pending home sales index, based on contracts signed in October, was up 0.6 per cent at 87.2 from an upwardly revised index of 86.7 in September.
The forward-looking indicator of home sales was more upbeat than expected by economists, who had forecast a decline of 1.0 per cent.
The data, which measures contracts signed on sales that have yet to close, helped lift US stock prices and drag down prices for government bonds. The blue-chip Dow Jones industrial average climbed 101.45 points to close at 13,727.03.
The data came a day ahead of a meeting of policy-makers from the US Federal Reserve, and traders saw it as increasing the likelihood the central bank would trim interest rates by a modest quarter-percentage point, and not a bolder half-point as some had thought possible.
Still, the boost in pending sales was not enough to increase analysts' hopes for a housing recovery anytime soon.
"It's possible that after a big hit, housing sales will stabilise, but the short answer is that it's too soon to say," said James O'Sullivan, an economist with UBS Securities in Stamford, Connecticut.