Pending Sales of U.S. Existing Homes Fell 2.8% in January

The number of Americans signing contracts to buy previously owned homes fell in January, a sign the industry that triggered the recession was struggling at the start of 2011.

The index of pending home resales dropped 2.8 percent after a revised 3.2 percent decrease the prior month that was initially reported as a gain, figures from the National Association of Realtors showed today in Washington. The median estimate in a Bloomberg News survey of economists called for a 2.3 percent decrease.

Foreclosures that are driving down prices and unemployment at 9 percent signal the housing market may not make much headway this year. Interest rates that are rising pose another challenge to real estate, which may lag behind the rest of the economy this year.

“This is worrying,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “People may be holding back because they think there are more foreclosures coming. We need a strong pickup in jobs to see people buying again.”

Pending home sales were projected to fall after an originally reported gain of 2 percent in December, according to the median of 39 forecasts in the Bloomberg survey. Estimates ranged from a drop of 6 percent to an increase of 1.5 percent.

Consumer spending in the U.S. rose 0.2 percent in January, less than forecast and the smallest gain since June, as increasing food and fuel prices caused Americans to cut back on other goods and services, Commerce Department figures showed earlier today.