An index that tracks signed contracts to purchase previously occupied homes rose in February from a record low a month earlier as buyers took advantage of deeply discounted prices and low interest rates. The National Association of Realtors says its seasonally adjusted index of pending sales for previously occupied homes rose 2.1%—in line with expectations—to 82.1 in February from January’s record low of 80.4.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales. Because of falling home prices and mortgage rates, homeownership is more affordable than it’s been since at least 1970, the trade group says.
Hopes have been growing that home sales, while still severely depressed, may be finally showing signs of life. Sales of existing home sales rose 5.1% in February, the largest increase in nearly six years.
Prices, however, are expected to keep falling for at least another year. Tens of thousands of homes are tied up in the foreclosure process and not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.
