Submitted by Fox First at Ten on October 25th
By CHRISTOPHER S. RUGABERAP Economics Writer
WASHINGTON (AP) - The number of Americans who signed contracts to buy homes rose only slightly, suggesting sales may level off in the coming months after solid gains in the past year.
The National Association of Realtors said Thursday that its seasonally adjusted index of sales agreements rose in September to a reading of 99.5. That's up from August's reading of 99.2 but below a two-year high of 101.9 reached in July. Contracts are up 14.5 percent from a year ago.
An index reading above 100 is considered healthy. The index bottomed at 75.88 in June 2010 after a homebuyer's tax credit expired.
The pending home sales index is a measure of the number of signed contracts to purchase homes. The index can signal where the housing market is headed because a signed contract usually results in a final sale one or two months later.
The housing market has been recovering this year, helped by the lowest mortgage rates in decades, a limited supply of homes for sale and steady price increases.
Some economists said the rising trend in home sales will likely continue, despite a few weaker months this fall.
The figures "suggest that existing home sales are likely to flatten over the next month or two," Joseph LaVorgna, an economist at Deusche Bank, said in an email. "Looking beyond then, we expect sales to resume their uptrend as the underlying housing fundamentals continue to improve."
New home sales jumped last month to the highest annual pace in the past two and a half years.
And builders broke ground on new homes and apartments at the fastest pace in more than four years in September. They also requested the most building permits in four years, a sign that many are confident that home sales gains will continue.
The housing recovery could help boost economic growth and hiring at time when manufacturing has weakened sharply. Still, housing makes up a much smaller part of the economy than it did before the bubble. So rising construction and sales may have less of an impact.
And many first-time homebuyers are struggling to qualify for mortgages, since banks have raised credit standards. Many also demand high down payments that many would-be homebuyers can't afford.
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