Pending home sales hold steady amid recovery

Pending home sales held steady in September amid the blossoming housing market recovery. 

While contract signings to buy a home have been accelerating for most of the year, they increased only slightly last month, to 99.5, up from 99.2 in August, indicating a possible short-term slowdown of final sales, the National Association of Realtors (NAR) said Thursday.

"Home contract activity remains at an elevated level in contrast with recent years, but currently appears to be bouncing around in a narrow range," said Lawrence Yun, NAR's chief economist. 

"This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013."

Still, signings are 14.5 percent ahead of last year's figures, but below the two-year high of 101.9 reached in July. 

The data, which is a forward-looking indicator for sales, reflect contract signings, not closings.

Pending home sales have risen for 17 consecutive months on a year-over-year basis, lifting existing-home sales this year.  

In September, all regions showed double-digit increases in contract activity from a year ago with the exception of the West, which is constrained by limited inventory.

All but one region, the Midwest, showed monthly improvement in signings. 

The index rose 1.4 percent in the Northeast, to 79.3, increased 1 percent in the South, to 111.5, rose 4.3 percent in the West, to 106.9 and fell 5.8 percent in the Midwest, to 89.5. 

An index reading above 100 is considered healthy. The index hit rock-bottom more than two years ago, in June 2010, when it fell to 75.88 after the end of a homebuyer's tax credit designed to spur more activity. 

Housing experts agree that the market is on the mend after years of struggling. Mortgage rates are expected to remain low and experts argue that once private lending picks up, the sector will enjoy a more robust recovery. 

Interest rates, which are hovering at or near record lows below 4 percent, should gradually increase to about 4 percent in the second half of 2013.

Completed existing-home sales this year will total close to 4.6 million, an increase of 9 percent, and are projected to rise another 9 percent next year to nearly 5.1 million, according to the NAR forecast. 

With notably lower housing inventory, the national median existing-home price is expected to increase 6 percent this year and 5 percent in 2013.