Pending home sales in October increased for the ninth consecutive month, marking the longest streak since record keeping began in early 2001, according to a National Association of Realtors’ news release.
The Pending Home Sales Index increased 3.7 percent to 114.1 from the September figure of 110.0. The October number was 31.8 percent higher than the October 2008 figure of 86.6, marking the largest recorded annual growth, according to the release. It was the highest index since March 2006 recorded a figure of 115.2. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined as well as the first of five consecutive record years for existing-home sales.
Lawrence Yun, NAR’s chief economist, said that 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 million annually, but we were well below the 5 million mark before the home buyer tax credit stimulus,” Yun said in the news release. “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.”
By region, October’s pending sales index increased 11.6 percent in the Midwest to 109.6, up 36.6 percent from a year ago, NAR reported. The South increased 5.4 percent to 115.4, up 31.6 percent from a year ago, while the Northeast surged 19.9 percent to 100.2, up 44.2 percent from a year ago. Although the West saw the index fall 11.2 percent to 127.7, it remains 21.9 percent higher than a year ago.
Yun warned that sales could fall in the near 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 noted. “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.”