Pending home sales slip

WASHINGTON (Reuters) - Pending sales of existing U.S. homes slipped in November but were much stronger than previously thought in October, according to a report on Tuesday that offered mixed news on the battered U.S. housing sector.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in November, dropped to 87.6 from an upwardly revised 89.9 in October.

Economists polled by Reuters ahead of the report were expecting pending home sales to decline by 0.5 percent from October's originally reported 87.2.

The pending homes sales data suggests that the volume of sales will hold steady for a while before turning upward before the end of the year, said NAR Chief Economist Lawrence Yun.

"Although there could be some minor slippage in the first quarter, existing home sales should hold in a narrow range before trending up," Yun said.

The recent data was encouraging because it showed the market climbing out of its deep doldrums of the summer, said Ryan Reed, economist with National City Corp. in Cleveland.

"The trend is one of stabilization," he said. "We were driven to such low sales figures back in August. We simply couldn't go any lower."

In August, the pending homes sales index dipped to 85.5.

Still, other economists predicted that the worst is still ahead for the housing market as foreclosures climb and home values stagnate and even fall in some markets.

"The underlying trend in sales remains downwards, because people are unwilling to borrow money in order to finance the purchase of rapidly depreciating assets," said Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, New York.

Since the spring, investors have turned their backs on mortgage investments, prompting lenders to tighten underwriting standards from the levels used during a five-year housing boom that ended in 2005.

NAR predicted that existing home sales for 2007 will total 5.65 million units and should edge up to 5.70 million this year.

The median existing home sales price is likely to have fallen 1.9 percent in 2007 and hold steady this year, the group said.