Index of pending home sales rises 3.5% in November
The increase from October was led by an 18.2% jump for contracts in the West as reduced prices and low interest rates drove deals.
By Roger Vincent, Los Angeles Times
December 31, 2010
Led by a jump in the West, an index of pending home sales increased in November, the National Assn. of Realtors said, adding that the forward-looking index of contracts signed indicates that the market will improve gradually in 2011.
There was a 3.5% pickup in the contract index to 92.2 in November compared with October, but the index was down 5% from the same period a year earlier. Contracts typically take one or two months to convert into closed sales.
Deals are being driven by reduced prices and low interest rates that have created a historically high level of home affordability, said Lawrence Yun, chief economist for the association.
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Further gains in sales are still needed for the market to reach normal levels of sales activity, but the uptick is encouraging, he said.
"If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume," Yun said.
In the West, the index jumped 18.2% month over month in November and slightly surpassed the number of agreements signed a year earlier, the association said. It was easily the biggest rise in any region; the Northeast gained 1.8% while the Midwest and South reported declines of 4.2% and 1.8%, respectively, in the index.
Home prices will vary locally, Yun said, but national median prices should remain stable even with a continuing flow of distressed properties coming to market. The median U.S. price in the third quarter was $177,000 for previously owned homes and $227,700 for new homes. The median is the point at which half the houses sold for more and half for less.
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3% around the end of 2011, Yun said, and unemployment should drop to 9.2%.
"All the indicator trends are pointing to a gradual housing recovery," Yun said.
The pending home sales index is based on a national sample. An index of 100 equals the average level of contract activity during 2001.
Copyright © 2010, Los Angeles Times
Friday, December 31, 2010
Index of pending U.S. home sales rises 3.5% in November