Pending home sales rose for the eighth straight month in September as new home buyers rushed to take advantage of the $8,000 tax credit before it expires at the end of the month, according to an industry group.
The National Association of Realtors said Monday that pending home sales rose 6.1 percent to 110.1 from 103.8 in August. It was the largest annual increase on record and marked the longest streak of gains since the measurement began in 2001. It was also the highest level in nearly three years.
Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, to be flat.
"What we're witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month," said NAR Chief Economist Lawrence Yun. "Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery."
The group estimates about 3 million renters are now financially well-qualified to buy a median-priced home, and Yun said if buyers stay within their budget, there will be a sizable pent-up demand.
In the Northeast, the index slipped 2.0 percent to 83.6 in September but remains 16.9 percent above September 2008. In the Midwest the index rose 8.1 percent to 98.2 in September and is 17.8 percent higher than a year ago.
In the South, pending home sales increased 4.9 percent to an index of 109.7 and is 22.8 percent above September 2008. In the West the index jumped 10.2 percent to 143.8 and is 23.7 percent above a year ago.
Congress is moving to extend the credit to buyers who sign sales agreements by April 30. Lawmakers also want to add a $6,500 credit for buyers moving into other homes as long as they have been living in their current residence at least five years.
"We're clearly not out of the woods because an excess of homes remains on the market despite recent improvements," he said. "Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. An extended and expanded tax credit would help absorb this incoming inventory."
The index surged a record 21.2 percent in September from the same period a year-ago.
—The wires contributed to this report.
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