November 30th, 2012
Pending home sales saw strong gains in October, which could suggest that low mortgage rates and affordable home prices are contributing to a recovering housing market.
The Pending Home Sales Index climbed 5.2 percent to 104.8, up from an upwardly revised 99.6 in September, according to the National Association of Realtors. The index is also 13.2 percent higher than it was in October 2011, when it stood at 92.6.
“We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive,” said Lawrence Yun, NAR chief economist.
However, pending homes sales are contracts to purchase a home, not completed closures. While a spike in pending sales represents good news for the economy, there are several scenarios that could cause a closing to fall apart, ranging from last-minute costly repairs to buyers or sellers backing out of the deal. For this reason, consumers who are in the middle of the buying process should work closely with their mortgage service company in the final days before closing to catch any issues before they derail a sale.