Pending Home Sales Surge Ends, But Levels Still Beat Last Year's

After a surge of activity spurred by the expiring first-time home buyer tax credit, the National Association of Realtors reported today that contract activity for pending home sales fell, but still remains above 2008 levels. Based on contracts signed in November, the Pending Home Sales Index dropped 16 percent to 96 from an upwardly revised 114.3 in October, while remaining 15.5 percent higher than November, 2008 level of 83.1.

While perhaps a tempting cause for concern, several factors portend to buoy the market in 2010:

• NAR expects notable gains in the spring as home buyers respond to the recently extended and expanded tax credit.

• For buyers who have historically timed their purchase based on school-year considerations, credits of $8,000 for first-timers and $6,500 for repeat buyers — both expire on June 30 — will likely force some to accelerate plans.

• Affordable housing conditions have helped to create momentum in the market.

• Expected job growth in the second half will support home buying activity and absorb enough inventory to bring a balance between buyers and sellers.

Drops were experienced in the Northeast, Midwest South and West PHSI indices. However, the regions’ November levels ranged between 9.2 percent and 21.4 percent above November, 2008 levels.