Pending home sales rose unexpectedly in September from the month before but were still far lower than a year ago, data from a real estate trade group showed.
The National Association of Realtors Pending Home Sales Index, based on contracts signed in September, was up 0.2% in August but was 20.4% lower than a year ago.
This was the first rise in the index since June.
Economists polled by Reuters ahead of the report were expecting sales to decline by 2.8 percent in September, following the 6.5 percent drop in August.
The association's senior economist Lawrence Yun noted that favorable mortgage interest rates are available. "Contrary to perceptions, conventional mortgages are widely available at
favorable interest rates for the bulk of home buyers," he said.
Even with the unexpected rise in pending home sales during September, the association is projecting a modest recovery for existing home sales in 2008 and does not see any real
improvement for new home sales until 2009.
"The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we're forecasting if buyers regain their
confidence about the long-term benefits of homeownership," said Yun.
"Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year," he added.
Sales of previously owned homes are expected to hit 5.67 million this year, a 12.5 percent decrease from 2006. Single family homes sales are expected be down by 24.3 percent from
"We are hitting a low," said Yun at the group's conference in Las Vegas. But he cautioned that the pace of a recovery is uncertain and data on the national housing market may sag early
next year if consumer confidence does not improve.