The Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Chicago buyers into action.
A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program.
The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better.
On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard.
- Northeast Region: +19.6%
- Midwest Region : +27.3%
- South Region : +7.1%
- West Region : -0.4%
Home buyers should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong.
In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined.
The best time to buy a home this year may have already passed. The next best time may be right now.
Talk to your real estate agent if you’re planning to buy a home in 2011. It may be smart to move up your time frame.
