Pending home sales were up strongly in October, driven by a
sharp increase in sales in the Midwest region of the country,
according to figures released today by the National Association of
Signed contracts for home purchases were up 5.2 percent in
October, according to the NAR, reaching one of their highest levels
in five years. The NAR's Pending Home Sales Index reached 104.8, a
figure not reached since March 2007, except for a brief spike
caused by the 2010 homebuyer tax credit.
Double-digit annual increase
Compared to one year ago, pending sales showed an annual
increase of 13.2 percent from their Oct. 2011 level. The figures
represent signed sales agreements for home purchases that have not
been closed and typically serve as an advance indicator of
completed sales one to two months later.
"We've had very good housing affordability conditions for quite
some time, but we're seeing more impact now from steady job
creation, and rising consumer confidence about home buying now that
home prices have clearly turned positive," said Lawrence Yun, NAR
According to the NAR, pending sales have now shown annual
increases for 18 consecutive months.
Midwest shows outsized gains
October's increase was almost entirely due to an unusually sharp
increase in pending sales in the Midwest, where home sales
contracts were up 15.6 percent from September's rate. In fact, the
West and Northeast actually showed monthly declines in pending
sales, with their rates down 1.1 percent and 0.1 percent from the
previous month, respectively. The South showed a 5.5 percent
Yun said Hurricane Sandy had some effect in limiting sales
contracts in the Northeast.
West lags other regions
The sharp increase in the Midwest means that three of the
nation's four major regions have now seen healthy gains in pending
sales over the past year, with the Midwest, South and Northeast
posting annual gains of 20.0 percent, 17.4 percent and 13.3 percent
compared to their Oct. 2011 levels, respectively. Pending sales in
the West have shown only a weak increase during that period, with a
0.9 percent annual gain.
It should be noted that unusually big swings such as the
increase seen in the Midwest this month may be the result of
statistical anomalies and are often reversed the following
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