US October pending home sales up 0.6 pct, second monthly increase

US October pending home sales up 0.6 pct, second monthly increase

	Published : Mon, 10 Dec 2007 15:53 By : Agencies Print this Story

WASHINGTON (Thomson Financial) - US homebuyers unexpectedly signed more contracts for purchasing existing homes for the second month in a row in October, the National Association of Realtors (NAR) said today.

The NAR's Pending Home Sales Index (PHSI) rose 0.6 pct to 87.2 on a seasonally adjusted basis, following an upwardly revised 1.4 pct increase in September.

Economists were forecasting a decline in the 1-2 pct range. The index was 18.4 pct below October of last year, its second highest year-over-year drop since 2001. The biggest was a -20.4 pct in September.

The October report 'indicates stabilizing of existing home sales in the near term,' said NAR chief economist Lawrence Yun.

The PHSI counts contracts signed for buying homes. It's an indication of the existing home sales rate one to two months ahead when the sales actually close and are counted in that report.

Although the subprime mortgage simply 'does not exist' any longer, Yun said that does not mean all of the potential home sales which in the past might have been financed with subprime loans have disappeared as well.

Federal Housing Administration financing is 'picking up much of the fallout,' Yun said. He believes 'most of the credit crunch has already been accounted for in the data.'

While a full recovery in new-home sales is unlikely before 2009, the NAR's new annual forecast, also released today, predicts a small uptrend in existing home sales next year. They are expected to rise from 5.67 mln in 2007 to 5.70 mln in 2008.

The median price of an existing home should be down 1.9 pct this year to 217,600 usd. It should rise a modest 0.3 pct to 218,300 usd in 2008.

Regional trends in the PSHI continued to be volatile. In the Northeast, the index rose 16.0 pct, rebounding from a 10.1 pct drop in September. The index in the West rose 8.4 pct based on some recovery in the market for so-called jumbo mortgages above the Fannie Mae/Freddie Mac limit of 417,000 usd.

The Midwest pending sales index fell 1.4 pct in October and it was down 7.8 pct in the South.

dennis.moore@thomson.com

dem/wash/slj

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