Pending sales of U.S. existing homes increase 0.8% in November

WASHINGTON – Contracts to purchase previously owned homes rose in November as employment gains and low borrowing costs helped bring potential buyers into the market.

The pending home sales index advanced 0.8 percent after a revised 1.2 percent decrease in October, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for the index to rise 0.5 percent, with estimates ranging from a decline of 1.5 percent to an advance of 3.5 percent.

“The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” NAR chief economist Lawrence Yun said in a statement. “With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers.”

Purchase contracts climbed 1.7 percent in the 12 months ending in November after a 2.1 percent annual increase in October on an unadjusted basis, the NAR report showed. The three months of year-over-year advances follow a series of 11 straight declines.

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The pending sales index was 104.8 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home- buying traffic, according to the NAR.

Pending sales increased in three of four regions from the previous month, led by a 1.4 percent gain in the Northeast. Contract signings climbed 1.3 percent in the South and 0.4 percent in the West. They fell 0.4 percent in the Midwest.

Leading indicator

Economists consider pending sales a leading indicator because they track new purchase contracts. Existing-home sales are tabulated when a deal closes, usually a month or two later.

Those re-sales dropped more than forecast last month to a 4.93 million annual pace, the weakest reading since May and down 6.1 percent from a 5.25 million pace in October, NAR data showed last week.

New-home construction exceeded a 1 million annualized pace in November for a third month. Housing starts declined 1.6 percent to a 1.03 million annualized rate, Commerce Department data showed.

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