The Pending Home Sales Index, which is a forward-looking indicator of existing home sales based on contracts signed, surged ahead for a record eight-consecutive months, providing the latest evidence that the housing market is on the road to recovery.
Pending home sales increased by 6.1% to 110.1 in September, which puts the index 21.2% above a year ago – the largest annual gain since the index began in 2001, according to the National Association of Realtors.
“We’re witnessing a rush of first-time buyers trying to beat the expiration of the (first-time home buyer) tax credit at the end of this month,” the chief economist for the NAR said.
But he cautioned,“We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvement. Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline.”
Not missing an opportunity to lobby Congress to extend the subsidy, he added that “an extended and expanded tax credit would help absorb this incoming inventory.”
Foreclosures are likely to rise next year, according to analysts, and an extension of the credit may be warranted. But pent-up home demand, coupled with historically low interest rates and the big rise in affordability over the past couple of years, may go a long way in absorbing additional inventories.
A strong foundation for a more permanent economic recovery must include rising home sales and rising home prices.
0 comments:
Post a Comment