Pending home sales jumped 5.2% to 104.8 in October, its highest level since March 2007, the National Association of Realtors reported Thursday. Annually, pending sales increased 13.2% from October 2011, reflecting 18 consecutive months of rising sales.
The Pending Home Sales Index released by NAR releases data based on contracts, not closings.
NAR Chief Economist Lawrence Yun believes buyers are reacting to favorable market conditions. “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 Yun.
Despite a 0.3% rise in pending home sales in September, analysts were skeptical based on Wednesday's new home sales numbers. However, the increase in today's report "should renew expectations for a positive contribution from the housing sector," Econoday said.
The index report shows very distinct regional patterns. “Contract activity surged in the Midwest and is showing very healthy gains in the South, but was down slightly in both the Northeast and West,” Yun said.
The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market. All regions are up from a year ago, with double-digit gains in every region but the West.”
"Though the hurricane's effect on Northeast sales during November is still a question, today's report points convincingly to building momentum for existing home sales," said Econoday. "The Dow is moving to opening highs following today's report."
Click on the image below to see the full index.