An index gauging home-sales contract in October rose 3.7%, the ninth consecutive month of gains and a new record, the National Association of Realtors reported Tuesday.
The NAR's Pending Home Sales Index gained 4.1 points over September to 114.1, 31.8% over October, 2008, the biggest ever year-over-year increase in the index. It is now the highest it has been since March of 2006, when it was 115.2.
Gains were led by the Northeast, which shot up 19.9% to 100.2 in October, 44.2% ahead of the same month last year. The Midwest rose 11.6% to 109.6, a gain of 36.6 from last October. The South was up 5.4% to 115.4, 31.6% ahead of October, 2008. The West, however, fell 11.2% to 127.7, still up 21.9% year-over-year.
"We should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010," said Lawrence Yun, NAR chief economist.
"Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,"said Yun. "This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."
Still, the Realtors expect sales activity to slow in coming months. "The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months," Yun said. "Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process."