The National Association of Realtors' Pending Home Sales Index (PHSI) rose 10.4% to 89.3 based on contracts signed in October – up from 80.9 in September. The index, which bottomed out in June, remains 20.5% below a surge to a cyclical peak of 112.4 in October 2009.
The data reflect contracts and not closings, which normally occur with a lag time of one or two months.
The PHSI in the Northeast jumped 19.6% to 71.3 in October but is 27.3% below the tax credit peak in October 2009. In the Midwest, the index surged 27.3% in October to 81.7 but is 24.8% below a year ago. Pending home sales in the South rose 7.1% to an index of 93.8 but are 18.4% below October 2009 levels. In the West, the index slipped 0.4% to 104.3 and is 15.6% below a year ago.
NAR Chief Economist Lawrence Yun says the improving job market and consequential boost to household formation will help the housing market recovery going into next year.
"More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very-low-risk borrowers is needed and could quickly help in the housing and economic recovery," Yun adds.
In the near term, Yun expects home sales will continue to climb from their cyclical low this past summer.
SOURCE: National Association of Realtors