Pending home sales revived in August

In a sign that buyers are responding to low home prices and more affordable interest rates, the pending home sales index saw a 7.4% boost to 93.4 in August, according to the National Association of Realtors. That is 8.8% higher than the August 2007 index of 85.8. The index, which measures signed sales contracts, is the highest since it stood at 101.4 in June 2007. Each region saw a surge in the index from July to August. In the South, it increased 2.3%, the Midwest rose 3.6%, the Northeast was up 8.4%, and the West climbed 18.4%. However, a forward-looking index like this has more volatility than one based on existing-home sales. “We need to see just how much of this gain holds up,” Lawrence Yun, Washington-based NAR’s chief economist, said in a statement. NAR reports that home prices are forecast to increase 2% to 3% next year. Existing-home sales are projected to be 5.04 million this year and increase to 5.41 million in 2009. However, new-home sales are expected to hover at around 503,000 this year and decrease to 471,000 in 2009.