Pending sales index reports increases

The pending-home-sales index rose 5.3% in June, after hitting a six-year low in May, according the National Association of Realtors. The index, which measures signed sales contracts, increased to 89 from 84.5 in May, but remains 12.3% below the June 2007 level. June’s reading was the highest for the index since October, when it hit 89.8. Contract signings increased 9.3% in the South, 4.6% in the West, 3.4% in the Northeast and 1.3% in the Midwest. "This is welcome news because a rise in contract activity is necessary for an overall housing recovery," said Lawrence Yun, chief economist at the Washington-based NAR. The pending-sales index will continue to increase due to recent housing legislation that offers a tax credit to first-time homebuyers and aims to reduce the number of foreclosures. "With a tax credit now available to first-time homebuyers, increases in home sales could be sustained, with the momentum carrying into 2009," Mr. Yun said.