US pending home sales rise sharply in Oct, higher year on year

29 November 2012 18:17  [Source: ICIS news]

WASHINGTON (ICIS)--US pending home sales rose sharply in October, the National Association of Realtors (NAR) said on Thursday, climbing by 5.2% from September and more than 13% ahead of the home-buying pace seen in the same month last year.

NAR said its pending home sales index (PHSI) rose to 104.8 in October from the upwardly revised September reading of 99.6.

Except for a few isolated spikes driven by one-time federal tax credits in mid-2010, NAR said the index is at its highest point since March 2007.

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 association's pending sales index is seen as a reliable, forward-looking indicator for near-term expectations in the US housing sector.

The index is measured against the 100 baseline set by the NAR in 2001 to represent an average or healthy pace of pending home sales contracts.

NAR chief economist Lawrence Yun said the data indicate that the nation’s housing market recovery is gaining strength and that potential home buyers are increasingly confident about buying a first home or trading up.

“We’ve had very good housing affordability conditions for quiet some time,” Yun said, referring to record-low home mortgage loan rates and still low but improving home prices. 

“But we’re seeing more impact now from steady job creation and rising consumer confidence about home buying now that home prices have clearly turned positive,” he said.

On a year-to-year basis, NAR said, pending home sales have risen for 18 straight months.

The sharp gain in pending home sales comes amid other positive reports about the housing sector, with existing home sales rising 2% in October and increasing confidence among home builders about the future.

The US housing industry, especially new home construction, is a crucial downstream consuming sector for a wide range of chemicals, resins and derivative products.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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