Pending home sales increased 3.7% to a reading of 114.1 in October from a revised to 110.0 in September, originally reported as a 6.1% rise to 110.1, according to an index released yesterday by the National Association of Realtors.
The nine consecutive months of increases in pending home sales marks the first time since its inception in 2001 that such a streak occurred, NAR said in a release.
Thomson Reuters’ poll of economists had predicted a 109.5 reading.
Year over year, the pending homes sales index was up 31.8% from last October, when it was 86.6.
Regionally, pending sales were mostly higher. The Northeast saw a 19.9% increase to 100.2, while sales rose 11.6% to 109.6 in the Midwest. In the South sales increased 5.4% to 115.4, while in the West, pending sales dropped 11.2% to 127.7.
“Keep in mind that housing had been underperforming over most of the past year,” Lawrence Yun, chief economist for the realtor’s association. “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.
“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.”
“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,” Yun 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.
“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010,” Yun said. “That would mean broad wealth stabilization for the vast number of middle-class families.”