Pending home sales in the U.S. increased by much more than expected in the month of October, according to a report released by the National Association of Realtors on Thursday.
NAR said its pending home sales index jumped 5.2 percent to 104.8 in October after edging up by 0.4 percent to an upwardly revised 99.6 in September. Economists had expected the index to show a much more modest increase of about 1.0 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Lawrence Yun, NAR chief economist, said, "We've had very good housing affordability conditions for quite some time, but we're seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive."
With the bigger than expected increase, the pending home sales index reached its highest level since reaching 111.3 in April of 2010, when home sales were boosted by a tax credit.
Excluding a few spikes during the tax credit period, NAR said the index is at its highest level since March of 2007.
Compared to the same month a year ago, the pending home sales index was up by 13.2 percent in October, reflecting the 18th consecutive month of year-over-year growth.
However, the report also showed mixed regional results, as pending home sales in the Midwest and South jumped 15.6 percent and 5.5 percent, respectively, while pending home sales in the West and the Northeast dropped by 1.1 percent and 0.1 percent, respectively.
"The Northeast saw some impact from Hurricane Sandy, but limited inventory in the West is keeping a lid on the market," Yun said. "All regions are up from a year ago, with double-digit gains in every region but the West."
On Wednesday, the Commerce Department released a report that unexpectedly showed a modest decrease in new home sales in the month of October,
The report said new home sales edged down 0.3 percent to a seasonally adjusted annual rate of 368,000 in October from the revised September rate of 369,000.
The annual rate of new home sales in September was downwardly revised from the previously reported 389,000, which had represented a two-year high.
Economists had been expecting new home sales to inch up to 390,000 from the 389,000 originally reported for the previous month.
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