Pending Home Sales Surprise In September - NAR

Countering gloomy forecasts, pending home sales rose unexpectedly in September from the month before, though they were still well below the year-ago period, the National Association of Realtors [NAR] said Tuesday. That bit of good news compensated somewhat for the NAR's forecast that existing home sales will hit a five-year low of 5.66 million this year -- the NAR's ninth consecutive downward monthly revision and a 12.7% drop from last year. The NAR's Pending Home Sales Index [PHSI], which counts contracts signed, gained 0.2% to an 85.7 reading from 85.5 in August, but was 20.4% lower than it was in September 2006. Economists had forecast a decline of about 2.5% because many buyers are having difficulty getting mortgages and many others are sitting out the market in the hope of further price declines. "It seems the Federal Reserve's surprise interest rate cut may have helped bring a few buyers out of the woodwork," said Weiss Research real estate analyst Mike Larson. NAR senior economist Lawrence Yun noted that "[e]ven with relatively low fourth-quarter sales, 2007 will be the fifth highest year on record for existing home sales." To put the matter in perspective, he pointed out that the median sale price in 2007 will be down less than 2% from its all-time high in 2006. For 2008, the NAR expects to see a "modest recovery" in existing home sales "as the impact of the credit crunch subsides." The PHSI was up 5.4% in the Midwest and 1.5% in the South, but down 0.1% in the West and 10.1% in the Northeast. Prices on existing homes are forecast to fall 1.7% to a national median of $218,200 for 2007 and stay flat through next year.

Sources: NAR press release, Forbes, AP, MarketWatch
Commentary: Shiller: Housing Market Is Nowhere Near Bottom • Caveat Emptor: The Tumbling Housing Market • Case-Shiller Home Price Index Digs Deeper
Stocks to watch: XHB, ITB, ICF, IYR

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.