(Bloomberg News) The number of Americans signing contracts to buy previously owned homes rose more than forecast in November as falling prices and low borrowing costs boosted demand.
The index of pending home sales increased 7.3 percent to the highest level since April 2010 after climbing 10.4 percent the prior month, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1.5 percent gain, according to the median estimate in a Bloomberg News survey.
The industry that triggered the 18-month recession that ended in June 2009 is showing signs of stabilizing as construction picks up, builder confidence improves and the number of houses on the market declines. Nonetheless, another wave of foreclosures may weigh on real-estate values next year.
"It looks like buyers are becoming more confident and are attracted to record-low mortgage rates," Aaron Smith, a senior economist at Moody's Analytics Inc. in West Chester, Pennsylvania, said before the report. At the same time, he said, "activity still looks depressed by historical standards."
Estimates for pending home sales ranged from a drop of 3 percent to an increase of 11 percent, according to the median of 30 forecasts in the Bloomberg survey.
Pending home sales were up 6.9 percent from November 2010.
All four regions showed an increase in contract signings from a month earlier, led by a 14.9 percent surge in the West and an 8.1 percent jump in the Northeast. Pending sales climbed 4.3 percent in the South and 3.3 percent in the Midwest.
Housing Affordability
"Housing affordability conditions are at a record high and there is a pent-up demand from buyers who've been on the sidelines, but contract failures have been running unusually high," NAR chief economist Lawrence Yun said in a statement accompanying the release. "Some of the increase in pending sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage."
Today's report showed an index level for pending home sales of 100.1 on a seasonally adjusted basis. A reading of 100 is consistent with the average level of contract activity in 2001 and coincides with "historically healthy" home-buying traffic, according to the NAR.