WASHINGTON - A gauge of pending sales of homes rose 10.4 percent in October due to "excellent" housing affordability conditions, but activity needs further improvement to reach a healthy level, the National Association of Realtors reported Thursday.
The association's pending-home-sales index rose to 89.3 in October from 80.9 in September. The 10.4 percent gain is the largest on record, with the data going back to 2001.
Pending sales reflect contracts signed between home buyers and sellers -- closing a sale then usually takes a few months. A reading of 100 equals the average level of contract activity during 2001.
"The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market" will help, said Lawrence Yun, the group's chief economist.
In October, pending home sales rose in three of four regions: up 27.3 percent in the Midwest, 19.6 percent in the Northeast and 7.1 percent in the South. The index fell 0.4 percent in the West.
Nationally, the index is down 20.5 percent from last year, when first-time buyers were taking advantage of a tax credit.
October's jump is a "blip," said Leif Thomsen, chief executive of Mortgage Master, a privately owned lender.
"We are going into the winter and holiday months, and that is typically a slow season," Thomsen said. Also, "we all know that unemployment is still hovering around 10 percent, and there are a lot of people who are not thinking about [buying] a home now."
In a separate report released last month, the National Association of Realtors said sales of existing homes fell 2.2 percent in October, with activity near record lows.
Jennifer Lee, senior economist at BMO Capital Markets, gave a more optimistic take, pointing to data that showed applications for new mortgages rose 7.7 percent in November. She said that number suggests that potential home buyers are interested again.
"No special reasons come to mind [for the rise], although I did muse last month that September's decline may be due to all of the uncertainty over the foreclosure documentation issue, with the point being that who would put in a bid for a potentially foreclosed home when you don't know if it was legally foreclosed or not," Lee wrote in a note to clients.
Distributed by McClatchy-Tribune Information Services.
