Second Straight Month By Kevin Chiu
Pending home sales rose for the second straight month in August, but are still well off year ago levels, according to the National Association of Realtors. The sale of previously owned homes, condos and townhouses were up 4.3% for the month, reflecting an improving trend for the market.
NAR data reflects pending sales and not closings, most of which are still contingent sales until mortgages can be obtained and home inspections and other contingencies cleared. Historically as many as eight in ten transactions in troubled economic times fail to close as sales.
Near record low mortgage rates and lower home prices with some markets at 30-year low price levels are producing an increase in home buyer activity in some areas of the country. But high unemployment and weak consumer confidence are slowing recoveries in most markets.
“Current low consumer price inflation has helped keep mortgage interest rates very attractive this year,” said NAR chief economist Lawrence Yun. “However, recent rising trends in producer prices at the intermediate and early stages of production, along with very high commodity prices are raising concerns about future inflation and future mortgage interest rates.”
In the West, the pending home index rose 6.4% but remains 19.6% below a year ago. Pending sales in the South increased 6.7% but are 13.1% below a year ago.
However, not all areas of the country showed an improvement in sales. In the Northeast, pending home sales declined 2.9% in August and remains 28.8% below August 2009. In the Midwest, the index rose 2.1% but is 26.5% below a year ago.