WASHINGTON - Pending home sales rose 7.4 percent from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The National Association of Realtors said yesterday that its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was 8.8 percent higher than a year earlier and was the highest since 101.4 in June, 2007.
Home sales are considered pending when the seller has accepted an offer but the deal has not yet closed. Typically there is a one-to-two-month lag before a sale is completed.
Pending sales gained across all regions in August: up 18.4 percent in the West, 8.4 percent in the Northeast, 3.6 percent in the Midwest, and 2.3 percent in the South.
Sales are picking up in places that have experienced the most severe declines in housing prices - including California, Florida Nevada and Arizona, plus Rhode Island and the District of Columbia area, said Lawrence Yun, the trade group's chief economist.
Still, he said he does not expect home prices to rebound until next year and expects a modest gain of 2 to 3 percent in 2009.
The association forecasts existing-home sales at 5 million this year, rising to 5.41 million in 2009, and new-h ome sales of 503,000, falling to 471,000 next year.
A major unknown is how the worldwide financial crisis and economic slump will affect the housing market.
Despite numerous efforts by the Federal Reserve to encourage banks to lend more, lenders have kept tight reins on mortgage money, and average rates on 30-year mortgages have remained above 6 percent for most of the year.38.89037 -77.03196