Pending Home Sales Show Gradual Rise

By:
Peter King | October 04, 2010

Pending home sales posted another moderate increase in August, but still lag well behind their rate of one year earlier, according to figures released today by the National Association of Realtors (NAR). 

Signed contracts for home purchases were up a seasonally adjusted 4.3 percent for the month, following a downwardly revised 4.5 percent rise in July. Even so, the figures represent a more than 20 percent annual decline from the August 2009 level.
 
“Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” said Edward Yun, NAR chief economist. “However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence.”
 
Yun said he expects a continued steady rise in home sales, absent any sudden rise in mortgage rates. He expressed concerns, however, about possible inflationary pressures that could boost rates and slow the recovery.
 
Pending sales typically foreshadow completed home sales by about two months, the time needed to arrange financing and conduct the closing. Both fell sharply following the end of the homebuyer tax credit program; pending sales dropped by 30 percent in May, immediately after the tax credit deadline.
 
Figures from last spring and late summer/early fall 2009 received a substantial boost from the homebuyer tax credit. Compared to the pre-crash year of 2007, the August Pending Home Sales Index score of 82.3 was 14.5 percent below the 96.3 average rating for all of 2007, suggesting the market presently lags about that far behind pre-crash levels.

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