Pending home sales have increased for seven straight months, the longest in the series of the index, which began in 2001, according to the National Association of Realtors (NAR).
NAR's Pending Home Sales Index for August rose 6.4% to 103.8 from a reading of 97.6 in July, and is 12.4% above August 2008, when it was 92.4. The index is at the highest level since March 2007, when it was 104.5.
The group's chief economist, Lawrence Yun, notes that not all contracts are resulting in closed sales within an expected time frame.
"The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules," he says, referring to the Home Valuation Code of Conduct.
The Pending Home Sales Index in the Northeast jumped 8.2% to 85.3 in August and is 12% higher than August 2008. In the Midwest, the index rose 3.1% to 90.8 in August and is 7.6% above a year ago. In the South, pending home sales increased 0.8% to an index of 104.6 and is 8.2% above August 2008. In the West, the index surged 16% to 130.5 and is 22.3% above a year ago.
"There is likely to be some double counting over a span of several months, because some buyers whose contracts were cancelled have found another home and signed a new contract to buy," Yun says. "Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being cancelled? Without historic precedents, it's challenging to assess."
Yun also notes that the data sample coverage for pending sales is smaller than the measurement for closed existing-home sales, so the two series will never match one for one.
SOURCE: National Association of Realtors