Home sales contracts highest in a year
Home sales pending index reaches 99.3 in October, a 10.4 percent increase from September. But a recovery in home sales doesn't look imminent.
The number of Americans who signed contracts to buy homes jumped in October to the highest level in a year. But the gain follows three months of declines and isn't enough to signal a housing recovery.
The National Association of Realtors said Wednesday its index of sales agreements rose 10.4 percent last month to a reading of 93.3.
A reading of 100 is considered healthy. The last time it was that high was in April 2010, one month before a federal home-buying tax credit expired.
Contract signings usually indicate where the housing market is headed. There's typically a one- to two-month lag between a signed contract and a completed deal.
But a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the bid. A sale isn't final until a mortgage is closed.
"In absolute terms, this is a very depressed level," he said.
Homes are the most affordable they've been in decades. Long-term mortgage rates are hovering near historic lows and prices in some metro areas have tumbled.
Yet, this year could be the worst year for sales since the housing bubble burst. Sales of previously occupiedhomes could end up being the fewest since 1997. And sales of new homes are headed for the worst year on records dating to 1963.
Americans are holding off for a number of reasons. High unemployment and weak job growth have deterred many would-be buyers. Loans are also harder to come by. Many lenders are requiring 20 percent down payments and strong credit scores to qualify. Even those who have good credit and stable jobs are hesitant to buy because they are worried prices will keep falling.
The number of people who signed home contracts had risen in both May and June before falling 7 percent over the past three months.
Contract signings rose across most of the country. October's index increased 24.1 percent in the Midwest, 17.7 percent in the Northeast and 8.6 percent in the South. It fell 0.3 percent in the West.