Activity in the housing market continued to expand for the sixth consecutive month in July, according to a report released by the National Association of Realtors on Tuesday, the quickest climb since the group starting tracking the market 10 years ago.
The pending home sales index, which tracks home contracts signed, rose by 3.2% during in July from a reading of 94.6 to a reading of 97.6 – fueled primarily by large rises in sales activity in the South and West. The reading is at its highest level since June 2007.
The increase was considerably better than the 1.5% increase economists were looking for.
NAR said a combination of the $8,000 first-time homebuyer tax credit and overall lower home prices helped firm up the nation’s housing market. Lawrence Yun, NAR’s chief economists, said the “recovery is broad-based across many parts of the country” in a statement.
Yun said pending home sales might be accelerating partially because home buyers are pushing to get transactions done before the tax credit expires on Nov. 30. According to NAR, between 1.8 million and 2 million home buyers took advantage of the tax credit this year, and estimates 350,000 additional sales would not have occurred without the credit.
Pending home sales are contracts signed, but not sales completed. While credit markets are easing somewhat according to the industry group, it is still taking on average 60 days for a home sale to be completed.
Regionally, pending home sales in Northeast declined 3% in July, but remain 4.7% higher than year ago. In the Midwest, sales fell 2% but are 8.1% higher than a year ago. In the South, pending home sales activity rose 3.1%, which makes it 12% from a year ago. In the West, the index jumped 12.1% to 112.5 and 20% above a year ago.