The nation's realtors reported more encouraging housing news today, releasing a report showing that pending home sales rose in October for the ninth month in a row.
The National Association of Realtors (NAR) says that's the first time that's happened since 2001, when the Index was established.
The Pending Home Sales Index is considered a forward-looking indicator because it's based on contracts signed in October, not actual closed sales. The October Index increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing.
"Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus," he said. "This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."
Much of the increase occurred in the Northeast, with the Index 44 percent above its October 2008 level. Other parts of the country also showed gains, but not as much.
Yun cautioned that home sales could dip in the months ahead.
"The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months," he said. "Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process."
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