The National Association of Realtors' index of pending home sales climbed an unexpected 0.6%, the second month in a row the number has increased, it said Monday. The latest figure, which measures contracts signed in October, confounded economists' forecasts of a 1% drop. September's reading was revised up to a 1.4% increase as well. "We're not likely to see any further collapse at this point," said Richard DeKaser, chief economist at National City Corp, who had forecast a gain. "I'm not optimistic about the outlook for the housing market, but we're scraping bottom in the fourth quarter." On a year-to-year basis, the NAR index dropped 18.4%. Two out of four the regions, the Northeast and the West, showed an increase since last month. The NAR held its forecast for the number of homes sold in the U.S. steady at 5.67 million for 2007, but inched up its 2008 forecast to 5.7 million from 5.69 million.
Lawrence Yun, NAR chief economist, said the worst part of the credit crunch may be over. "The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming," Yun said. "Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels."
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