The National Association of Realtors' (NAR) Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, jumped 7.4% to 93.4 from an upwardly revised reading of 87 in July, the group reports.
The index is at the highest level since June 2007, when it stood at 101.4. The uptick is in response to improved affordability of homes, according to NAR chief economist Lawrence Yun.
"What we're seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region," he says. ‘It's unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we're hopeful most of the increase will translate into closed existing-home sales."
Yun additionally cautions that the sampling size for pending home sales is smaller than the track on existing-home sales, so there is more volatility in the forward-looking series.
"We need to see just how much of this gain holds up," he says.
SOURCE: National Association of Realtors