House sales are down, & it's not just the bad weather

WASHINGTON - The number of buyers who agreed to purchase a home fell sharply in January, a sign that demand for housing is sinking this winter as stormy weather slammed Eastern states.

Record snowstorms in January and February had many Americans shoveling sidewalks and driveways instead of combing through listings for open houses. Partly as a result, an index that tracks sales agreements fell 7.6 percent from December to a seasonally adjusted January reading of 90.4, the National Association of Realtors said yesterday.

It was the lowest reading since last April and a disappointment to economists, who had expected that it would rise to 97.6.

The weakness, however, was not confined to the wintry Northeast. The biggest month-to-month drop was in the West, where sales fell 13 percent. Sales fell almost 9 percent in the Northeast and Midwest and 2 percent in the South.

The weather isn't the only culprit, wrote economist Jennifer Lee. "The impact of government incentives . . . appears to be running out of steam, which is, frankly, a scary thought," she wrote.

The index is considered a barometer for future sales because typically there is a one- to two-month lag between a signed sales contract and a completed deal. A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

The index has declined for two out of the past three months because home shoppers feel less rushed after a deadline for a homebuyer tax credit was extended from Nov. 30 to April 30.

The Federal Reserve is on track to complete $1.25 trillion in purchases of mortgage-backed securities this month. That has kept interest rates low. The average rate on a 30-year fixed rate loan fell this week to 4.97 percent from 5.05 percent a week earlier, Freddie Mac said yesterday.

Despite lower rates, millions of homeowners are still facing foreclosure and government efforts to help them have largely failed. Droves of people who want to sell or refinance are stuck because their homes are worth less than they paid.