BT : Pending sales of US existing homes up in Oct

Business Times - 02 Dec 2009

LATEST US DATA
Pending sales of US existing homes up in Oct

(NEW YORK) The number of contracts to buy US previously owned homes unexpectedly rose in October as consumers rushed to take advantage of a tax credit that was due to expire.

The index of signed purchase agreements, or pending home sales, climbed 3.7 per cent to 114.1 after increasing 6 per cent in September, the National Association of Realtors said yesterday in Washington.

The ninth consecutive gain compares with the median forecast of a decline in a Bloomberg News survey of economists.

The administration's incentive for first-time buyers, which last month was extended into next year and expanded to include current owners, will help housing emerge from its worst slump since the 1930s.

A jobless rate at a 26-year high and mounting foreclosures represent challenges that the industry will find difficult to overcome.

'Housing is showing encouraging signs of recovery,' Scott Brown, chief economist at Raymond James & Associates Inc in St Petersburg, Florida, said before the report.

'A turnaround in the job market is a necessary condition for further improvement.'

Sales were projected to fall one per cent after an originally reported gain of 6.1 per cent in September, according to the median of 37 forecasts in a Bloomberg News survey.

Estimates ranged from a drop of 5 per cent to a 6.5 per cent increase.

A separate report yesterday showed manufacturing in the US expanded in November for a fourth consecutive month.

The Institute for Supply Management's manufacturing index fell to 53.6, lower than economists forecast, from October's three-year high of 55.7, according to the Tempe, Arizona-based group. Readings above 50 signal expansion.

Pending home sales are considered a leading indicator because they track contract signings.

The Realtors' existing-home sales report tallies closings, which typically occur a month or two later. The Realtors group started publishing the index in March 2005, and data goes back to January 2001. Compared with October 2008, pending sales were up 29 per cent, the biggest year-over-year gain since records began. -- Bloomberg