According to a report released by the National Association of Realtors on Tuesday, pending home sales increased by much more than expected in the month of July, with pending sales increasing for the sixth consecutive month.
NAR said its pending home sales index in July rose 3.2% to 97.6 from a reading of 94.6 in June. With the increase, which exceeded economist estimates of 1.5% growth, the index rose to its highest level since June of 2007.
A pending sale is one in which a contract was signed but has not yet been closed. It normally takes four to six weeks to close a contracted sale.
The unexpected increase in pending home sales was partly due to strong growth in the West, where pending home sales jumped 12.1%.
Pending home sales in the South also rose 3.1%, while pending home sales in the Northeast and the Midwest fell by 3.0% and 2.0%, respectively.
Lawrence Yun, chief economist for the NAR said, “The recovery is broad-based across many parts of the country,” “Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit.”
The NAR reported that 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.
To qualify for the credit they must complete the transaction by November 30th, giving buyers little time to act.
Existing-home sales are expected to rise through the fourth quarter, says Lawrence Yun, “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year.”
He also added, “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.”
Contributed by MLR Realty
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