Pending Home Sales Surge In October

There were more signs of life in the nation's beleaguered housing market in October. Pending home sales, a measure of sales contracts signed but not yet closed, jumped 10.4 percent over September's level, according to the National Association of Realtors (NAR).

While the number is encouraging, it should be pointed out that each month many contacts fail to close because of problems with appraisals or the lending process itself. Still, Lawrence Yun, NAR's chief economist, sees it as a long-overdue hopeful sign.

“Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years,” Yun said. “We hope this is indicates more buyers are taking advantage of the excellent affordability conditions.”

Pending home sales increased the most in the Midwest, rising 24.1 percent. Pending home sales in the South rose 8.6 percent in October and are 9.7 percent higher than October 2010. In the West the index slipped 0.3 percent but is 8.1 percent above a year ago.

More good news

This encouraging bit of housing news comes on the heels of the Commerce Department's this week that new home sales increased in October 1.3 percent, which was slightly more than forecast. If housing prospects are, indeed, improving, it may be one reason consumers appear to be feeling slightly better these days.

The Conference Board reports its Consumer Confidence Index for November rose 15.1 points to 56. The Expectations Index was up 17 points and the Current Conditions Index rose 11.2 percent.

“After hitting levels not seen since the depths of the Great Recession, for some reason households decided that conditions were really not that bad,” said economist Joel Naroff, of Naroff Economic Advisors, of Holland, Pa. “Despite what was a somewhat disappointing employment report, respondents to the Conference Board's survey felt that the labor market was getting a little better.”