Pending Home Sales Surge in October, Clear Regional Patterns Noted

Pending home sales rose sharply inrnOctober according to the Pending Home Sales Index (PHSI) released Thursday byrnthe National Association of Realtors® (NAR). rnThe index increased 5.2 percent to 104.8 from 99.6 in September and wasrn13.2 percent above the October 2011 index of 92.6.  September’s estimate was revised upward fromrnthe 99.5 originally reported.  October’srnnumber was the highest for the index since an identical number was posted in Marchrn2007 and is the 18^th consecutive month in which the index has postedrnan annual increase.</p

The PHSI is a forward-looking indicator based on signed contracts for homernpurchases.  The contracts are generallyrnexpected to convert to home sales within one to two months.   </p

Lawrence Yun,rnNAR chief economist, said buyers are responding to favorable marketrnconditions.  “We’ve had very good housing affordability conditions forrnquite some time, but we’re seeing more impact now from steady job creation, andrnrising consumer confidence about home buying now that home prices have clearlyrnturned positive.”</p

Two out ofrnfour regions reported a monthly increase on a seasonally adjusted basis withrnthe Midwest up 15.6 percent while the South posted a more modest 5.5 percentrngain.  The Northeast was down 0.1 percentrnand the West 1.1 percent.  All fourrnregions posted annual increases; the Northeast was up 13.3 percent, the Midwestrn20.0 percent, the South 17.4 percent, and the West 0.9 percent. </p

Yun notedrnthere are clear regional patterns.  “Contract activity surged in thernMidwest and is showing very healthy gains in the South, but was down slightlyrnin both the Northeast and West.” He noted there were reasons for some of thernregional discrepancies, “The Northeast saw some impact from Hurricane Sandy,rnbut limited inventory in the West is keeping a lid on the market.  Allrnregions are up from a year ago, with double-digit gains in every region but thernWest.” </p

NAR’s index isrnbased on a large national sample, typically representing about 20 percent ofrntransactions for existing-home sales.  An index of 100 is equal to thernaverage level of contract activity during 2001, which was the first year to bernexamined as well as the first of five consecutive record years forrnexisting-home sales; it coincides with a level that is historically healthy.

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