US pending home sales rise 4.3% in Aug, suggest recovery

05 November 2010 15:51  [Source: ICIS news]

WASHINGTON (ICIS)--US pending home sales rose by 4.3% in August from July, the National Association of Realtors (NAR) said on Friday, indicating a gradual improvement in residential property sales over coming months.

The association said that its pending home sales index rose to 82.3 in August from the downwardly-revised level of 78.9 in July.

The index measures home sales activity against the baseline year of 2001, when the index was set at 100.

A residential property sale is listed as “pending” when a contract has been signed but the transaction has not been closed and funded with a mortgage loan. A pending sale usually closes within a month or two of contract signing.

The upturn in pending home sales for August suggests “a gradual improvement in home sales in upcoming months”, according to the association’s chief economist, Lawrence Yun.

“Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market,” Yun said.

However, he cautioned, “the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence”.

The US government reported on Friday that the nation added 159,000 private sector jobs in October, the largest one-month gain since April this year. But the jobs advance was not enough to lower the country’s unemployment rate, which held steady in October at 9.6%, according to the Labor Department.

Yun also cautioned that a housing recovery could be set back if mortgage loan rates were to start climbing.

“Recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices, are raising concerns about future inflation and future mortgage interest rates,” he said.

The housing industry is a crucial downstream consuming sector for a wide variety of chemicals and resins, either as components of end-use construction materials such as roofing and insulation or in the manufacturing processes for building supplies.

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