Pending Homes Sales Up for Five Straight Months

Pending home sales posted their fifth straight monthly increase in June, according to new figures from the National Association of Realtors (NAR), the longest streak of consecutive monthly increases since July 2003.

Signed contracts for home purchases were up 3.6 percent in June compared to the previous month, and were 6.7 percent above the June 2008 rate. The strongest monthly increases of the four major U.S. regions were in the South, which posted a 7.1 percent increase over May on a seasonally adjusted basis, and an annual increase of 8.1 percent from June 2008.

Sales in the Midwest showed the strongest yearly gain, an increase of 11.6 percent over June 2008 but up only 0.8 percent from May. The Western region was up 2.9 percent from May but posted the only annual decline of the four regions, down 0.2 percent from June 2008. The Northeast showed increases of 0.4 percent from the previous month and 5.8 percent for the year.

The NAR attributed the increases to the continuing influence of low housing prices and interest rates, along with the impact of an $8,000 tax credit for first-time homeowners. NAR spokesman Lawrence Yun said purchase activity has been concentrated in the lower end of the market.

Yun cautioned that time is running out for homeowners seeking to take advantage of the tax credit, noting that it expires Nov. 30 and that home purchases are currently taking about two months to close on after signing a purchase contract.

The NAR also reported that its Home Affordability Index remains very favorable for purchasers, allowing a median-income family to purchase a median-priced home while spending only 15.7 percent of their gross income on mortgage principal and interest, compared to 25 percent in more typical economic conditions.

The HAI is based on a formula involving home prices, mortgage interest rates and household incomes. The NAR's Pending Home Sale Index reached 94.6, on a scale in which 100 equals the level of pending home sales in 2001, when the NAR first started keeping the index. The current figures show that pending home purchases are approaching 2007 levels, when the index averaged 96.3 for the year.