Pending home sales reported by the National Association of Realtors fell 1.9% after an upwardly revised 0.3% gain in January.  This index tracks contracts signed but not closed for single family home sales.  Pending home sales are thought to lead actual sales by a couple of months. 

NAR chief economist sounded optimistic, suggesting that existing home sales could start to show an increase within a few months.  “We’re looking for
essentially stable sales in the near-term, before higher mortgage loan limits translate into more sales in high cost markets.”

This does not sound different in tone to Greenspan’s recent remarks suggesting that the drop in home prices will probably end “well before” early next year.  Recall that existing home sales rose unexpectedly in Feb, but at current sales levels, inventories of unsold used homes is near 9.6 months.  This is the key metric here and industry experts suggest a 5-6 month supply of inventory would reflect a more balanced market.

For the record, the May Fed funds futures contract is now implying about a 40 percent chance that the Fed delivers a 50 bp rate cut at the end of the month.  Watch the minutes today from the last month’s meeting.  Recall that two officials dissented from the decision to cut the Fed funds rate 75 bp.  Heated debate ?