Following a sharp drop in the months immediately after the homebuyer tax credit expired, the ""National Association of Realtors'"":http://www.realtor.org (NAR) gauge for future sales of previously owned homes has risen.[IMAGE]
NAR reported Thursday that its ""Pending Home Sales Index"":http://www.realtor.org/research/research/phsdata, a forward-looking indicator based on contracts signed in July, increased 5.2 percent from last month's reading. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
The index remains 19 percent below measurements recorded a year ago, but the month-to-month jump was an unexpected development, and some analysts are saying it may be a sign that the post-tax credit lull in home sales will soon come to an end. A group of economists surveyed by _Bloomberg_ were expecting the pending sales index to fall by 1 percent.
The national index had fallen 29.9 percent based on contract signings in May Ã¢â‚¬" closely reflected in ""JulyÃ¢â‚¬â„¢s 27 percent drop"":http://dsnews.comarticles/existing-home-sales-post-worst-showing-in-more-than-decade-2010-08-24 in actual existing-home sales. It lost another 2.8 percent after NARÃ¢â‚¬â„¢s analysis of JuneÃ¢â‚¬â„¢s contracts, likely[COLUMN_BREAK]
a good indicator of where AugustÃ¢â‚¬â„¢s actual sales will end up. The latest 5.2 percent increase could be a telling sign of SeptemberÃ¢â‚¬â„¢s sales numbers.
Despite the bit of good news his organization offered the markets with its Thursday report, Lawrence Yun, NAR's chief economist, cautioned that the recovery ahead will be a slow and lengthy one.
""Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,"" Yun said. ""But the recovery looks to be a long process. Homebuyers over the past year got a great deal [but] for those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.""
Pending home sales are currently up in every region of the country. The Northeast saw an increase of 6.3 percent; the MidwestÃ¢â‚¬â„¢s index rose 4.1 percent; the South posted a 1.2 percent gain; and the West was the big leader, with an 11.6 percent increase.
Paul Dales, U.S. economist for the research firm ""Capital Economics"":http://www.capitaleconomics.com, says though, that the key point is that economic conditions are not strong enough to generate a decent housing recovery.
Ã¢â‚¬Å“Processing delays mean that the relationship between pending home sales and actual existing home sales has loosened in recent months,Ã¢â‚¬Â Dales said. Ã¢â‚¬Å“But at face value, the former is now consistent with a rise in existing sales from July's record low of 3.83m to around 4.40m in August.Ã¢â‚¬Â
Dales added, Ã¢â‚¬Å“That would be a spectacular-sounding 15 percent month-to-month jump, but it would not even reverse the falls seen after the expiry of the tax credit and would leave sales at levels not sustained since 1997.Ã¢â‚¬Â