Home Sales Contracts Continue to Rise

The National Association of Realtors® (NAR)
announced on Thursday that pending home sales in November reached the highest
levels seen in 19 months.  The NAR
Pending Sales Index
, generally seen as a leading indicator of the level of
sales over the next 30 to 90 days, increased 7.3 percent from October figures
to an index of 100.1 and is 5.9 percent above November 2010 when the index was
94.5. 

The November reading is the highest
since April 2010 when it reached 111.5 near the end of eligibility for the
popular homebuyers tax credit which expired the following June 30.  The Pending Home Sales Index is based on signed
contracts for home purchases and does not reflect transaction closings.

Lawrence Yun, NAR chief economist, said the
gains may result partially from delayed transactions.  “Housing
affordability conditions are at a record high and there is a pent-up demand
from buyers who’ve been on the sidelines, but contract failures have been
running unusually high.  Some of the increase in pending home sales
appears to be from buyers recommitting after an initial contract ran into problems,
often with the mortgage,” he said.

Pending sales increased in every region.  In the Northeast the index was up 8.1 percent
to 77.1 but remained 0.3percent below one year earlier.  Midwest pending contracts increased to 91.6,
up 3.3 percent from October and 9.5 percent from November 2010.  The index was 103.8 in the South, up 4.3
percent month-over month and 8.7 percent year over year, and in the West the
index surged 14.9 percent to 121.2, a 2.9 percent annual increase.   

Yun said,  “November is doing reasonably well in
comparison with the past year.  The sustained rise in contract activity
suggests that closed existing-home sales, which are the important final
economic impact figures, should continue to improve in the months ahead.”

NAR Said that information on pending home sales
is not affected by the rebenchmarking the association did earlier this month on
its existing home sales index which resulted in a restating of numbers going
back 5 years and a 15 percent downward adjustment to those figures.  The pending sales index uses a different
methodology based directly on contract signings, and is adjusted for
seasonality.

Article source: http://www.mortgagenewsdaily.com/12292011_pening_home_sales.asp

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