Contracts signings increase for existing homes

The number of people who signed contracts to buy previously owned homes increased for the second straight month in August, more than predicted but still well below last year's levels. 

The seasonally adjusted index of pending home resales rose 4.3 percent to a reading of 82.3, from a downwardly revised 78.9 in July, 20.1 percent below the same month last year when it was 103, the National Association of Realtors said Monday.

The 4.5 percent gain in July was less than initially projected. 

Although the pace of home sales is still behind last year's figures, the increases could signal a gradually improving housing market during the next few months after sales plunged following the expiration of a federal government homebuyers tax credit. 

"Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," said Lawrence Yun, NAR's chief economist in a statement. "However, the pace of a home sales recovery still depends more on job creation and an accompanying rise in consumer confidence."

Mortgage loan rates on 30-year fixed mortgages matched a 4.32 percent in the week ended Sept. 30, according to a report last week from Freddie Mac. 

Yun said loan rates will need to stay low to propel demand while unemployment remains high. The jobless rate is expected to stay above 9 percent into 2011. 

Contract signings increase in three of four regions in August, led by a 6.7 percent increase in the South. Pending sales were up 6.4 percent in the West and 2.1 percent in the Midwest, while dropping 2.9 percent in the Northeast.