WRAPUP 4-US pending home sales edge up, vacancies rise

* U.S. pending home sales index edges up in December

* Tax credit skews monthly data, index up 10.9 pct yr/yr

* Home vacancy rate rises to 2.7 pct in fourth quarter
(Updates auto sales figures in paragraphs 16-18, markets in
paragraphs 7-8)

By Lucia Mutikani

WASHINGTON, Feb 2 (BestGrowthStock) – Pending sales of existing
U.S. homes edged up as expected in December, while home
vacancies rose in the fourth quarter, pointing to a slow and
painful recovery for the troubled housing market.

The National Association of Realtors said on Tuesday its
Pending Home Sales index, based on contracts signed in
December, rose 1.0 percent to 96.6 after a steep drop in
November when a boost from an initial tax credit for first-time
buyers ebbed.

The gain in the index, which leads sales of previously
owned homes by one to two months, was in line with market
forecasts. Compared to December 2008, it was up 10.9 percent.

The monthly rise in the Pending Home Sales index was not as
large as in the months prior to the November slide and
suggested existing home sales were flat to slightly weaker in
January, analysts said. Existing home sales fell to their
slowest sales pace in four months in December.

“There is still no evidence of a significant rebound in
home sales. The pending home sales index implies existing home
sales will be little changed between December and January,”
said Abiel Reinhart, an economist at JPMorgan in New York.

Separately, the percentage of homes standing empty rose to
2.7 percent in the final three months of 2009 from 2.6 percent
in the third quarter, the Commerce Department said. The rate
has risen for the last two quarters.

Still, investors were encouraged by the rise in pending
homes sales after November’s slump. U.S. stocks (Read more about the stock market today. ) surged on the
report and on reassuring corporate earnings, helping the S&P
500 index (.SPX: ) cap its best two-day run-up since October.

U.S. government debt prices rose ahead of a refunding
announcement later in the week. The dollar fell broadly.

Monthly housing data has been distorted by the first tax
credit, which saw prospective home owners pushing forward
purchases to beat the initial November deadline.

Although the tax credit was subsequently expanded and
extended until June, a lull in sales followed, causing
economists to question the sustainability of the housing
market’s recovery without government support.

TIGHTER LENDING STANDARDS

There are worries that the housing market, at the center of
the worst economic downturn since the Great Depression, could
take a step back and harm the broader economic recovery.

The Federal Reserve said on Monday most U.S. banks stopped
raising the bar for borrowers at the end of last year and even
made it easier for consumers to get some loans.

The U.S. central bank, however, also noted banks continued
to tighten standards on residential real estate loans in the
fourth quarter, a factor that could generate some bumps for the
housing recovery.

Demand for mortgages has been erratic and new home sales
also fell in December. Home building slowed sharply in the
fourth quarter and made a smaller contribution to growth than
in the prior period, the government said last week.

While the housing market recovery is showing some signs of
strain, other areas of domestic demand such as auto sales
continue to chart a path of steady improvement.

U.S. auto sales in January rose more than 6 percent from
the prior year to about 10.7 million units, according to data
from major automakers.

General Motors reckoned a massive recall by Toyota Motor
Corp of its top-selling vehicles had cut 200,000 vehicles from
the sales rate.

The January sales rate was down from 11.2 million units in
December.

The extension and expansion of the tax credit for
first-time buyers is expected to buoy sales in the months
ahead. Analysts do not expect them to set the same pace as that
achieved during the initial program.

“The January to November program likely borrowed some
strength from the future as prospective buyers rushed into the
market before its expiration, arguing for a moderation in the
pace of home sales,” said Anna Piretti, an economist at BNP
Paribas in New York.

A cautious note on the housing market was also sounded by
D.R. Horton (DHI.N: ), one of the top five U.S. homebuilders.

“Market conditions in the homebuilding industry are still
challenging, characterized by rising foreclosures, high
inventory levels of available homes, increasing unemployment,”
said chairman Donald Horton.

The U.S. homeownership rate fell to 67.2 percent in the
fourth quarter from 67.6 percent in the third quarter, the
Commerce Department report showed. It was the lowest since a
matching 67.2 percent in the second quarter of 2000.

With foreclosures on the rise, buyers are snapping up homes
on the cheap. Buyers paid 2.7 percent less, or a median of
$5,618 below the listing price on homes bought in December, up
from $5,538, or 2.6 percent in November, real estate website
Zillow.com said.
(For graphic on pending home sales, see
http://link.reuters.com/zeg37h)

Stock Market Analysis

(Additional reporting by Mark Felsenthal and Julie Haviv;
Editing by Kenneth Barry)

WRAPUP 4-US pending home sales edge up, vacancies rise