Home sales contracts soar

Home sales contracts soar
National Association of Realtors index spikes 32% as buyers take advantage of first-time homebuyer tax credit.
By Les Christie, CNNMoney.com staff writer
December 2, 2009: 02:51 PM
NEW YORK (CNNMoney.com) -- Americans are inking a lot of deals to buy homes.


In October the National Association of Realtors recorded an unprecedented ninth consecutive month of increases in the number of signed contracts.


Although these are not closed sales, and some deals can fall through, signed contracts are a good indicator of where the housing market is headed.


Between September and October NAR's Pending Home Sales Index rose 3.7% to 114.1 from 110 in October. But the index is 31.8% higher than a year ago, when it was 86.6. That's the biggest year-over-year gain in the history of the index. The PHSI is also at its highest level since March 2006.


NAR's chief economist, Lawrence Yun, gives much of the credit for increased sales to the homebuyer's tax credit, which first-time homebuyers could claim to reduce their taxes by up to $8,000.


"The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future," Yun said in a prepared statement.


The credit had be due top lapse on Dec. 1, so many October buyers may have acted to get in under the wire.


However, the credit has been extended through the middle of 2010 and expanded to include many move-up buyers. The housing industry hopes that will keep sales perking until the economy picks up and markets return to a more normal condition.