Pending sales of existing homes climb for third month

Bloomberg NewsDecember 29, 2012 

WASHINGTON -- Pending home sales rose for the third month in November, a sign of the housing recovery's resilience in the face of fiscal threats facing the United States.

The index of pending home sales climbed 1.7 percent to 106.4, the highest reading since April 2010, after a revised 5 percent gain in October, the National Association of Realtors reported Friday in Washington. The median forecast in a Bloomberg survey called for a 1 percent advance.

Low borrowing costs and stable prices are drawing homebuyers three years after a recession triggered in part by a collapse in housing prices. Fewer foreclosures are coming onto the market, easing concerns that values could fall.

"Housing is building some momentum," said Ryan Sweet, a senior economist at Moody's Analytics Inc. in West Chester, Pa. "There is a growing perception that now is a good time to buy. Prices are starting to tick up, mortgage rates are still rock-bottom and the job market has shown some signs of improvement."

Another report Friday showed the economy picked up in December. The MNI Chicago Report's business barometer rose to 51.6 in December, a four-month high, from 50.4 in November. A reading of 50 is the dividing line between expansion and contraction.

Estimates for pending home sales in the Bloomberg survey of 35 economists ranged from a 2.7 percent drop to an increase of 6 percent.

Three of four regions

showed a gain last month, including a 5.2 percent increase in the Northeast and a 4.2 percent advance in the West. Sales contracts were little changed in the South.

Pending sales are considered a leading indicator because they track purchase contracts in advance of actual transactions, which are tabulated a month or two later. Existing or previously owned homes account for more than 90 percent of the housing market.

Sales of existing homes reached a three-year high in November, rising 5.9 percent to a 5.04 million annual rate, the Realtor group reported last week.

New-home sales, also logged when contracts are signed, rose 4.4 percent in November to a 377,000 annual pace, the highest level since April 2010, the Commerce Department reported Thursday.

Property values, too, are picking up. The S&P/Case-Shiller index last week showed home prices rose 4.3 percent in October from a year earlier, the biggest 12-month advance since May 2010.

Record-low borrowing costs have helped fuel demand for would-be buyers who qualify for financing. The average rate on a 30-year, fixed-rate mortgage was 3.35 percent this week, according to Freddie Mac. A late November reading of 3.31 percent was the lowest in data going back to 1972.

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