Pending home sales, a measurement of homes on which contracts have been signed, rose 0.6 in October to a reading of 87.2 from an upwardly revised reading of 86.7 in September, according to the National Association of Realtors (NAR).
It was the second consecutive monthly gain, but remained 18.4 percent below the October 2006 index of 106.8. The NAR also said it expects pending home sales to show a slight near-term rise in 2008 but that a recovery for new-home sales is unlikely before 2009.
“The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” said NAR chief economist Lawrence Yun. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”
The October index rose 16 percent in Northeast to 80.6 compared to September, but is 11.1 percent below a year ago. In the West, the index increased 8.4 percent to 87.3, but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.
“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun said.