Pending home sales increase to level near a 6-year high

Index rises 5.2 percent

By Christopher S. Rugaber
AP Economics Writer

WASHINGTON (AP) — An index measuring the number of Americans who signed contracts to buy homes in October jumped to nearly its highest level in almost six years. Steady job gains and record-low mortgage rates have made home buying more attractive.

The National Association of Realtors said Thursday that its seasonally adjusted pending home sales index rose 5.2 percent to 104.8 in October. Excluding a few months when the index spiked because of a homebuyer tax credit, that is the highest level since March 2007.

The increase points to healthy sales increases of previously occupied homes in the months ahead. There’s generally a one- to two-month lag between a signed contract and a completed sale.

The rise in sales adds to evidence of a steady housing recovery. Builders are more confident in sales and are starting construction on more homes. Home prices are rising on a consistent basis, which encourages more potential buyers to come off the sidelines and purchase homes. And more people may put their homes on the market if they gain confidence that they can sell at a good price.

Signed contracts jumped 15.6 percent in the Midwest and rose 5.5 percent in the South. But they fell 1.1 percent in the West and dipped 0.1 percent in the Northeast.

Superstorm Sandy lowered pending sales in the Northeast, the Realtors’ group said. The West was also hurt by low inventories of available homes on the market.

A big reason for the rebound in housing is that the excess supply of homes that built up before the housing crisis has finally thinned out. The number of previously occupied homes available for sale has fallen to a 10-year low.

The inventory of new homes is also near the lowest level since 1963.