Pending Home Sales Surge in West

Sixth consecutive monthly gain for NAR index

By Inman News, Tuesday, September 1, 2009

Pending home sales rose 3.2 percent from June to July, with a surge in sales in the western U.S. outweighing declines in the Northeast and Midwest, the National Association of Realtors said today.

It was the sixth consecutive monthly increase in pending home sales, a trend that NAR Chief Economist Lawrence Yun expects to continue before falling off in the first quarter of 2010 if a tax credit for first-time homebuyers is allowed to expire Nov. 30.

NAR’s pending home sales index increased 3.2 percent from June to July and was up 12 percent from a year ago, NAR said. The index, based on contracts signed but not closed, is at the highest level since June 2007.

Pending home sales were up 12.1 percent from June to July in the West and 3.1 percent in the South, but fell 3 percent in the Northeast and 2 percent in the Midwest regions. All four regions saw a year-over-year increase in pending home sales, led by the West (20 percent) and followed by the South (12 percent), Midwest (8.1 percent) and Northeast (4.7 percent).

Yun said housing affordability has been at record highs this year, and that the added stimulus of an $8,000 first-time homebuyer tax credit has generated about 350,000 additional sales.

Although 1.8 million to 2 million homebuyers are expected to take advantage of the credit, NAR is urging Congress to extend it into 2010 and make it available to all buyers.

“Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” Yun said in a press release. With housing market fundamentals and the economy picking up, NAR expects home sales to pick up again in the second quarter of 2010, Yun said.

Bills pending in both houses would extend the credit for another year. Senate Banking Committee Chairman Sen. Chris Dodd, D-Conn., is co-sponsoring a bill by Sen. Johnny Isakson, R-Ga., that would increase the maximum amount of the credit to $15,000.