Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained.
The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8 after a revised 0.4 percent gain in September, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.
The lowest mortgage rates on record, stable prices and waning foreclosures are helping underpin sales three years after the last recession ended. Federal Reserve policy makers have targeted the industry with purchases of mortgage-backed securities as they seek to bolster the labor market and the expansion.
“As folks start to feel a little more comfortable about their home price, they’re going to put it on the market and you’re going to start to see this trend continue” of higher sales, Anika Khan, a Charlotte, North Carolina-based senior economist at Wells Fargo & Co., said before the report. “We still see the overall residential market continuing to add to growth in the coming quarters.”
Estimates in the Bloomberg survey ranged from a 1 percent drop to a 4 percent gain. The prior month’s figure was originally reported as a 0.3 percent advance. Compared with a year earlier, the index increased an unadjusted 18 percent after an 8.7 percent gain in the 12 months ended in September. After seasonal adjustment, pending purchases climbed 13.2 percent from a year ago.
Stocks held gains after the figures and amid optimism lawmakers will reach a budget deal. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,416.47 at 10:08 a.m. in New York.
“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,” Lawrence Yun, chief economist at the Realtors’ group, said in a statement.
A report from the Commerce Department showed the economy in the third quarter expanded more than previously estimated as a narrower trade deficit and gains in inventory overshadowed a smaller increase in consumer spending. Gross domestic product rose at a 2.7 percent annual rate, up from a 2 percent previous estimate, the agency said. Household purchases climbed at a 1.4 percent rate, the slowest in more than a year.
Labor Department figures showed today that fewer Americans filed applications for unemployment benefits last week as the job-market disruptions wrought by superstorm Sandy faded. Jobless claims dropped by 23,000 to 393,000 during the period.
Two of four regions showed a gain in October pending home sales, according to today’s report from the real-estate agents’ group. That included a 15.6 percent jump in the Midwest and a 5.5 percent gain in the South. They dropped 0.1 percent in the Northeast and 1.1 percent in the West.
Pending home sales are considered a leading indicator because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later, and made up more than 90 percent of the housing market last year.
New-home sales, logged when contracts are signed, dropped 0.3 percent to a 368,000 annual pace last month following a revised 369,000 rate in September that was weaker than initially reported, the Commerce Department said yesterday.
Sales of previously owned U.S. homes increased 2.1 percent to a 4.79 million annual rate in October, exceeding the median forecast of economists surveyed by Bloomberg, according to data from the Realtors’ group on Nov. 19.
Property values also are picking up. The S&P/Case-Shiller index of home prices in 20 cities showed home prices rose in the year ended in September by the most since July 2010, according to a Nov. 27 report.
Record-low borrowing costs have fueled demand for those able to get financing. The average rate on a 30-year, fixed mortgage declined to 3.31 percent last week, the lowest on record, according to McLean, Virginia-based Freddie Mac.
Fed Chairman Ben S. Bernanke said the central bank will take action to speed growth and spur a rebound in a housing market facing obstacles such as too-tight lending rules.
“We will continue to use the policy tools that we have to help support economic recovery,” Bernanke said in a Nov. 15 speech in Atlanta.
Bernanke said while tighter credit standards after a collapse in the subprime mortgage market were appropriate, “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.”