Westchester County Home News: Pending Home Sales Rise for Eighth Straight Month

Pending home sales rose again, marking eight consecutive monthly gains for the National Association of Realtors’ (NAR) forward-looking sales indicator – the longest streak since measurement began in 2001.

NAR’s Pending Home Sales Index, based on contracts signed in September, rose 6.1 percent compared to August’s reading, and is 21.2 percent higher than September 2008. The gain from a year ago is the largest annual increase on record, raising the index to its highest level since December 2006, NAR said.

Lawrence Yun, NAR’s chief economist, said the momentum comes from the government’s homebuyer tax incentive. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” Yun said.

Proponents lobbying for an extension of the homebuyer tax credit say the accelerated pace of sales transactions could continue if Congress moves to extend and expand the housing tax break this week, as promised.

According to Yun, if the increased home-purchase demand can be sustained, home values will stabilize sooner rather than over-correcting.

NAR estimates that approximately three million renters are now financially well-qualified to buy a median-priced home – a sizable, pent-up demand that Yun says is just waiting to be tapped.

Yun added, though, that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory.”