WASHINGTON (MarketWatch) - The pending home sales index rose 6.4% in August to the highest level since March 2007, the National Association of Realtors reported Thursday.
The index - which tracks sales contracts signed on existing homes - has risen seven months in a row for the first time since the index was established in 2001, the industry trade group said.
The pending-home sales index has been much stronger than existing-home sales, which are recorded at the closing of the sale, usually a month or two after the sales contract is signed. The pending sales index has risen 19% since December, while closed sales are up about 8%, according to data from the real estate group.
"The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules," said Lawrence Yun, chief economist for the real estate agents.
"No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month," Yun said. The government is offering a subsidy for first-time buyers, but sales must close before Nov. 30 to qualify. It's taking about two months to close a deal after home goes under contract.
The real estate industry is lobbying Congress to extend or expand the homebuyer tax credit.
"Sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery path. It also raises a risk of a double-dip recession," Yun said. "Extending and expanding the tax credit is the best tool in our arsenal to encourage financially qualified buyers to stimulate the economy and help reduce the budget deficit."
First-time buyers accounted for about 43% of buyers in August, according to a survey conducted by Campbell Communications.
The NAR has estimated that about 2 million buyers will take advantage of the tax credit this year, with 350,000 additional sales resulting. The others would have bought a house without the subsidy.
