Pending Home Sales Up Sharply

By:
Kara Johnson | December 02, 2010

Pending home sales rebounded in October, rising a seasonally adjusted 10.4 percent to reach their highest level since last spring.

The National Association of Realtors reported today that its Pending Home Sales Index rose to 89.3, the highest it’s been since last April, just before the end of the homebuyer tax credit program. Pending sales reflect signed sales contracts and typically predate trends in actual, closed sales by about two months.
 
“It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels,” said Lawrence Yun, NAR chief economist. “The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011.”
 
The seasonally adjusted index remains over 20 percent below the level it hit one year ago, when it reached 112.4 just prior to the original expiration date for the tax credit, just before Congress extended the program. By comparison, the index averaged 96.3, 87.2 and 95.1 for the years 2007-09, respectively.
 
 The index is based on a system where the sales levels in 2001 equal a score of 100.
 
The strongest sales growth was in the Midwest, which showed a 27.3 percent increase over the prior month, followed by the Northeast, with a 19.3 percent gain. Pending sales in the South were up 7.1 percent, while the West was the only region to show a month-to-month decline, down 0.4 percent.
 
All four regions remain down from their October 2009 levels by double-digit figures.

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