The sluggish U.S. real estate market saw rare signs of life in October as pending home sales figures jumped 10.4% for the month. The new National Association of Realtors report indicates closings may be increasing in the next couple months, which will bring some much-needed energy to the industry. Analysts believe low interest rates and slipping home prices may finally be triggering the release of pent-up buyer demand; many say the money is out there, but buyer confidence and the lack of a bottom in prices are keeping purchasers on the sidelines. For more on this continue reading the following article from TheStreet.
Pending home sales rose 10.4% in October, according to a National Association of Realtors report.
The index, which measures the number of contracts signed to buy previously owned homes in the U.S., rose to a reading of 93.3 in October from 84.5 in September.
"Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years," said Lawrence Yun, chief economist with the NAR. "We hope this is indicates more buyers are taking advantage of the excellent affordability conditions"
Pending home sales are viewed as an indicator of future home sales since they reflect contracts — not closings — and generally occur with a lag time of one to two months.
Data from earlier in the week painted a mixed picture of the overall housing sector. Home prices continued to fall during the third quarter according to the S&P/Case-Shiller home price index released on Tuesday.
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The index rose 0.1% in September, but posted a year-over-year decline of 3.9% for the three-month period. Economists expected the index to fall 3% year-over-year according to Thomson Reuters after declining 5.8% in the second quarter..
"Nationally, home prices are back to their first quarter of 2003 levels," said the report.
In September, 14 of the 20 cities showed home prices improving. However, only Detroit and Washington DC reported positive annual growth rates for the month.
"Over the last year, home prices in most cities drifted lower," said David Blitzer, chairman of the index committee at S&P Indices. "The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy."
The home price index was the second read on for the week. Sales of new homes rose 1.3% in October according to a Census Bureau report released Monday.
Single-family home sales rose to an adjusted annual rate of 307,000 from a revised 303,000 in September.
Economists surveyed by Reuters expected sales to have increased to 315,000 annualized units from the originally reported 313,000 units in September.
The average sales price for October was $242,300, and there is an estimated 6.3 month housing supply at current sales rates.
This article was republished with permission from TheStreet.