Pending home sales reach 3-year high

BREAKING NEWS

updated 10:24 a.m. ET Nov. 2, 2009

WASHINGTON - The volume of signed contracts to buy previously occupied U.S. homes rose for the eighth straight month in September as buyers scrambled to take advantage of a tax credit for first-time owners that expires at the end of this month.

The National Association of Realtors said Monday its seasonally adjusted index of sales agreements rose 6.1 percent from August to 110.1. It was the highest reading since December 2006 and more than 21 percent above a year ago. Economists surveyed by Thomson Reuters expected the index would be level at 103.8.

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales.

The housing market has been rebounding from the worst downturn in decades, aided by an aggressive federal intervention to lower mortgage rates and bring more buyers into the market.

Completed home resales rose in September to the highest level in more than two years as buyers scrambled to complete their purchases before the tax credit of up to $8,000 for first-time owners expires on Nov. 30.

Congress is moving to extend the credit to buyers who sign sales agreements by April 30. Lawmakers also want to add a $6,500 credit for buyers moving into other homes as long as they have been living in their current residence at least five years.

With foreclosures continuing to surge, "an extended and expanded tax credit would help absorb this incoming inventory," Lawrence Yun, the Realtors' chief economist, said in a statement.

Pending sales were up 10 percent in the West and 8 percent in the Midwest. They were up 5 percent in the South and were down 2 percent in the Northeast.

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