Pending home sales in the US rose strongly in October to one of the highest levels since 2007, according to a report released today by the National Association of Realtors.
The Pending Home Sales Index, based on contract signings, increased to 104.8 this October, a 5.2 percent gain from 99.6 in September and a 13.2 percent gain from 92.6 in October 2011.
An index of 100 is equal to the average level of signed contracts in 2001, the first year studied in the NAR survey, and represents a “historically healthy” level of activity. The data does not reflect closings, which are usually finalized within several months of signing.
NAR chief economist Lawrence Yun attributed the uptick in pending sales to buyers taking advantage of favorable market conditions. “We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive,” Yun said in a statement.
Outside of some surges fueled by tax credits, there are the most homes in contract since March 2007, when the index also hit 104.8. Pending home sales have increased on a year-over-year basis for 18 consecutive months.
Contract activity was higher in the Midwest and the South, but dipped for Northeast and West regions. The index for the Northeast fell 0.1 percent monthly to 79.2 in October, but is still 13.3 percent higher compared to the same period last year. The Midwest witnessed a 15.6-percent monthly jump to 104.4 in October, and the South climbed 5.5 percent monthly to 117.3. In the West, the index dropped 1.1 percent from September to 105.7.
“The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market,” Yun said. “All regions are up from a year ago, with double-digit (annual) gains in every region but the West.”
The index is taken from a large national sample, usually drawing from about 20 percent of transactions for existing-home sales.