US pending home sales jump 3.2% in July, recovery seen

01 September 2009 23:34  [Source: ICIS news]

WASHINGTON (ICIS news)--US home buying contracts surged in July by 3.2%, the National Association of Realtors (NAR) said on Tuesday, declaring that “housing market momentum has clearly turned for the better”.

The association said that the 3.2% increase in its pending home sales index in July put the measure at 97.6, the highest reading since June 2007, just before the onset of the US recession in December that year.

In addition, the association noted that pending home sales contracts have risen for six straight months, “a pattern not seen in the history of the index since it began in 2001”.

A home sale is listed as pending when buyers have signed a purchase contract for a residential property but the transaction has not been closed. A pending sale usually is completed within a month or two after buyers have the property inspected and appraised and secure a mortgage loan.

Contract activity in residential properties in July was 12% higher than July 2008 when the pending sale index was 87.1, said NAR chief economist Lawrence Yun.

“The housing market momentum has clearly turned for the better,” Yun said. “The recovery is broad-based across many parts of the country.”

“Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said.

Under a federal plan initiated in January this year, first-time home buyers receive an $8,000 (€5,600) tax credit. 

NAR has indicated that first-time buyers are accounting for as much as 30% of recent sales and could generate as many as 350,000 home purchases before the tax credit expires at the end of November.

The housing industry - especially new home construction - is a key downstream consuming sector for a wide variety of chemicals and plastics. 

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