The National Association of Realtors released favorable news today on pending home sales.
From the NAR press release:
Pending home sales are up, indicating a stabilization is taking place in the housing market, according to the National Association of Realtors.
The Pending Home Sales Index, based on contracts signed in August, rose 4.3 percent to a level of 110.1 from a reading of 105.6 in July, but is 14.1 percent lower than August 2005.
David Lereah, NAR’s chief economist, said the rise in the index is a hopeful sign. “Our sense is that home sales may have reached a low in August– the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible,” he said. “With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms.”
The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
Given the barrage of recent troubling indicators about housing, this news, along with the decline in mortgage rates, are two factors to ease some of the gloom. But they are not enough in my mind to erase it altogether.