By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — A gauge of pending sales of homes rose a 10.4% in October due to “excellent” housing affordability conditions, but activity needs further improvement to reach a healthy level, the National Association of Realtors reported Thursday.
The association’s pending-home-sales index rose to 89.3 in October from 80.9 in September. The 10.4% gain is the largest on record, with the data going back to 2001. U.S. stocks (SPX 1,215, +9.22, +0.76%) extended gains after the report was published.
Pending sales reflect contracts signed between home buyers and sellers, and closing a sale usually takes a few months. A reading of 100 equals the average level of contract activity during 2001.
“The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market” will help, said Lawrence Yun, NAR’s chief economist, in a statement.
In October pending home sales rose in three of four regions: up 27.3% in the Midwest, 19.6% in the Northeast, and 7.1% in the South. The index fell 0.4% in the West.
Nationally, the index is down 20.5% from last year when first-time buyers were taking advantage of a tax credit.
October’s jump is a “blip,” said Leif Thomsen, chief executive of Mortgage Master, a privately owned lender.
“We are going into the winter and holiday months, and that is typically a slow season,” Thomsen said. Also, “we all know that unemployment is still hovering around 10%, and there are a lot of people who are not thinking about [buying] a home now.”
In a separate report released last month, NAR said sales of existing homes fell 2.2% in October, with activity near record lows.
