Home sales contracts rose in November, Realtors report
Led by a jump in the West, pending home sales increased in November, the National Assn. of Realtors said Thursday, adding that the forward-looking index of contracts signed indicates that the market will improve gradually in 2011.
There was a 3.5% pickup in contracts compared with October, but the index was down 5% from the same period a year earlier, the association said in a report. Contracts typically take about one or two months to convert into closed sales.
Deals are being driven by reduced prices and low interest rates that have created a historically high level of home affordability, said Lawrence Yun, chief economist for the association.
Further gains in sales are still needed for the market to reach normal levels of sales activity, but the uptick is encouraging, he said.
"If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume," Yun said.
Contracts in the West jumped 18.2% on the group's index in November and slightly surpassed the number of agreements signed a year earlier, the association said. It was easily the biggest rise in any region, with the Northeast gaining 1.8% while the Midwest and South reported declines of 4.2% and 1.8%, respectively, on the index.
Home prices will vary in relation to local job-market conditions, Yun said, but national median prices should remain stable even with a continuing flow of distressed properties coming to market. The median U.S. price in the third quarter was $177,000 for existing homes and $227,700 for new homes. The median is the point where half the houses sold for more and half for less.
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3% around the end of 2011, Yun said, and unemployment should drop to 9.2% from the current 9.8%.
"All the indicator trends are pointing to a gradual housing recovery," Yun said.
-- Roger Vincent