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NAR reports surging pending home sales

December 3, 2010 - More consumers may soon be moving into new homes given strong pending home sales activity in October.

The National Association of Realtors reported that its pending home sales index - a measure of newly signed purchase contracts from buyers planning relocations in the near future - grew 10.9 percent from September to October to a reading of 89.3. The index was still 20.5 percent below readings from a year ago, when it neared peak levels while the homebuyer tax credit was still in effect. Since the report is forward-looking, it could show that the next two months of home sales activity will be positive.

The Midwest enjoyed the nation's largest improvement, climbing 27.3 percent, while the Northeast saw pending home sales tick up 19.6 percent.

"It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels," said the group's chief economist, Lawrence Yun. "More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery."

Experts have attributed tight lending standards to holding back many buyers, though record-low mortgage rates are available for those who do qualify for mortgages. Freddie Mac reported that the average interest on a 30-year fixed-rate mortgage sits at 4.46 percent.
 

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