A National Association of Realtors gauge of pending-home sales dropped 1.7 percent in October compared to September and fell 13.2 percent compared to October 2005, the association announced today.
The Pending Home Sales Index, based on contracts signed in October, had a reading of 107.2. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales.
In preparing the index, the Realtor group examines a large national sample — typically representing about 20 percent of transactions for existing-home sales. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
The index had reached a cyclical low of 105.6 in July, and the decline from year-ago levels is narrowing, the association reported.
David Lereah, NAR’s chief economist, said in a statement that a fairly steady pace of home sales can be expected for the next two months. “It’s important to focus on where the housing market is now — it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high — they’ll stay that way through 2007,” he stated. “In addition, a temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy, and the number for this year will be the third highest on record.”
Regionally, the index dropped 0.6 percent in the Midwest in October to 95.8 and was 15.4 percent below a year ago. The index in the South declined 1.7 percent to 122.9 and was 9.3 percent below October 2005. In the Northeast, the index eased 2.1 percent in October to 88 and was 13.5 percent lower than a year earlier. The index in the West fell 2.7 percent to 109.5 and was 17.4 percent below October 2005.