NEW YORK - Pending home sales increased 6.1% to a reading of 110.1 in September from an unrevised 6.4% rise to 103.8 in August, according to an index released today by the National Association of Realtors.
The eight 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 103.8reading.
Year-over-year the pending homes sales index was up 21.2% from last September, when the index was at 90.9.
Regionally, pending sales were mostly higher. The Northeast saw a 2.0% decrease to 83.6, while sales rose 8.1% to 98.2 in the Midwest. In the South sales increased 4.9% to 109.7, while in the West, pending sales surged 10.2% to 143.8.
“What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” NAR Chief Economist Lawrence Yun said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery,” he said.
“As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” Yun explained. “Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans.”
Yun added that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.”
