Pending Home Sales Hit 5-Year High

In a sign of a strengthening economy, contracts on new home construction reached a 5-year high in October, according to a Thursday report from the National Association of Realtors. The NAR’s pending home sale index increased by 5.2 percent to reach 104.8 last month. The last time the index hit such a level was March 2007, and is now 13.2 percent higher than one year ago. The index, which reflects contracts—not closings—on new homes, has now risen for 18 consecutive months.

We’ve had very good housing affordability conditions for quite some time, 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,” NAR chief economist Lawrence Yun said in a statement.

Not only did the October index exceed 100, but the September index was revised upward from 99.5 to 99.6. Pending home sales usually signals future home sales within the next couple of months.

Not only is the housing market closer to normal than at any other point since the crisis, but the recovery is also accelerating,” Trulia chief economist wrote on the Web site.

Activity varied greatly by region, however. The Midwest saw a 15.6 percent monthly increase, while the West saw a 1.1 percent decline. The index in the South improved by 5.5 percent, but the Northeast decreased by .1 percent.

The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market,” Yun said. “All regions are up from a year ago, with double-digit gains in every region but the West.

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