A forward-looking indicator of home sales in the U.S. rose during October, the second climb in a row.
The National Association of Realtors' index for pending sales of previously owned homes increased at a seasonally adjusted annual rate of 0.6% to 87.2 in October from September's 86.7, the industry group said Monday. The level of the gauge was 85.5 in August and 91.4 in July. The NAR is forecasting sales and prices to drop in 2007 and rise weakly in 2008.
NAR chief economist Lawrence Yun said the worst part of the credit crunch has been accounted for in the data, and that mortgage conditions have gotten better. "Some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels," he said.
The NAR index, based on signed contracts for previously owned homes, was 18.4% below the level of 106.8 in October 2006.
The NAR's pending home sales index was designed to try measuring which way the housing market is going in the future. It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.
By region, the Northeast increased 16.0% in October from September; it fell 11.1% since October 2006. The Midwest fell 1.4% in October from September; it fell 11.7% since October 2006. The South decreased 7.8% in October from September; it dropped 25.3% since October 2006. The West increased 8.4% in October from September; it plunged 16.9% since October 2006.
In its monthly forecast on the industry, the NAR projected existing-home sales at 5.67 million this year and 5.70 million in 2008. That compares with 6.48 million in 2006. Existing-home prices are expected to decline 1.9% to a median of $217,600 for all of 2007 and rise 0.3% in 2008 to $218,300, the NAR said.
A month ago, NAR projected 2007 sales at 5.67 million and 2008 sales at 5.69 million. It had forecast prices declining 1.7% to a median of $218,200 for all of 2007 and to hold essentially even in 2008 at $218,300.
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