U.S. housing sector sees more signs of decline

— -- The number of Americans signing contracts to buy previously owned homes fell more than forecast in November, signaling a further deterioration in housing.

The National Association of Realtors' index of pending home sales dropped 2.6% to 87.6, after a 3.7% gain in October that was larger than previously estimated. The figures underscore Treasury Secretary Henry Paulson's forecast that the housing recession will continue, posing the biggest risk to economic expansion. More stringent lending practices after the collapse in subprime lending and prospects that home prices will keep falling appear to be deterring buyers.

"There is no evidence it is bottoming," Paulson said Tuesday.

Justin Smirk, an economist at Westpac Banking, said: "There's more bad news to come in housing before it gets better."

Paulson indicated that the grim outlook may prompt an expansion of the plan administration officials have brokered with mortgage lenders. The plan was designed to make it easier to negotiate loans and freeze some adjustable-rate mortgages at current rates.

A third of planned home sales were canceled or delayed in September, October and November because of loan problems, according to the results of a survey of 2,416 real estate agents.

Pending home resales are considered a leading indicator because they track contract signings. The group's existing-home purchases report tracks closings, which typically occur a month or two later.

"They reported dreadful numbers and actually forecast that 2008 may be worse," David Rolfe, chief investment officer at Wedgewood Partners, said of KB Home's results.

Boston Federal Reserve President Eric Rosengren said Tuesday that the housing market is headed for its worst performance in 50 years, and that the drop in home prices could accelerate if the economy weakens.