RTTNews - Pending home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors on Tuesday, with pending sales increasing for the sixth consecutive month.
NAR said its pending home sales index rose 3.2 percent to 97.6 in July from a reading of 94.6 in June. With the increase, which exceeded economist estimates of 1.5 percent growth, the index rose to its highest level since June of 2007.
A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
The bigger than expected increase in pending home sales was partly due to strong growth in the West, where pending home sales jumped 12.1 percent.
Pending home sales activity in the South also rose 3.1 percent, while pending home sales in the Northeast and the Midwest fell by 3.0 percent and 2.0 percent, respectively.
The recovery is broad-based across many parts of the country, said Lawrence Yun, NAR chief economist. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.
NAR said that about 1.8 to 2.0 million first-time buyers are expected to take advantage of the $8,000 tax credit this year, including about 350,000 sales that would not have taken place without the credit.
At the same time, the group noted that buyers have little time to act because they must complete the transaction by November 30th to qualify for the credit.
While Yun expects existing-home sales to rise through the fourth quarter, he said, Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year.
However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010, he added.
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