Housing markets fared better than expected in October, according to a report out Tuesday from the National Association of Realtors (NAR).
The Pending Home Sales Index, considered a leading indicator of existing-home sales, slipped 0.7% to 88.9 from an upwardly revised reading of 89.5 in September. October’s reading was 1% lower than a year earlier. Despite economic softness, pending homes sales came in stronger than the 3% drop economists had forecast.
“…the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” said Lawrence Yun, the NAR’s chief economist.
“We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”
Pending home sales rose in the South, jumping 7.8% to 95.9 in October. In the Northeast the index rose 0.6% to 68.1. The index in the West plunged 8.7%, and tumbled 4.3% in the Midwest.
NAR forecast new-home sales for 2008 to total 486,000, decline to 393,000 in 2009 and then grow to 446,000 in 2010. NAR predicated existing home sales for this year to total 4.96 million, rising to 5.19 million next year and 5.55 million in 2010.
“The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” Yun said.
NAR forecast the 30-year fixed-rate mortgage to decline to 5.6% 1Q’09, rising slowly to 6% by the end of ‘09 and average 6.2% in 2010. NAR President Charles McMillan said: “Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy.”
The report has some optimistic notes in it, in the sense that the one-time bubble markets in Florida and California are now showing significant sale gains from their depressed levels over the past two years. Plunging home prices in these markets have attracted bargain hunting buyers raising cautious optimism of some stability in the housing market.
Existing-home sales for November will be released on December 23.