Pending home sales rise for seventh straight month in August

10.05.09
By Nicholas Storie

While there are still many negative signs pointing toward the continuation of the economic recession, it appears that many people around the country are planning to get a home loan as the number of pending home sales has increased for the last seven months.

That's according to the National Association of Realtors' Pending Home Sales Index which reported last week that pending home sales have increased every month since February of this year. The seven month stretch is the longest such increase since the index began in 2001.

The NAR reports that August's index reached a seasonally adjusted rate of 103.8 - a 6.4 percent increase over July and a 12.4 percent increase over the same period in 2008.

Western states appear to be the where the biggest shift in home buying will occur as the West's index increased 16 percent to 130.5 in August. It also marked the greatest increase over the last 12 months with a 22.3 percent gain.

Experts note that the NAR's index of pending sales is a good predictor of future home sales as it can take some time up to two months for a contract to be signed. But these numbers can also be misleading.

Lawrence Yun, chief economist for the NAR, said the amount of time it often takes for a deal to get done may play a factor in actual home sales for the next few months. Still, the likelihood of the end of a $8,000 tax credit for first time home buyers may boost sales for the next two months.

"The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules," he said. "No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month."

More Housing Market Articles | News Home | Discuss in our Forum

Pending home sales have risen for seven straight months.