The number of homebuyers who signed contracts to buy previously occupied homes rose for the ninth straight month as buyers rushed to take advantage of a tax credit for first-time owners before its original expiration at the end of November.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales agreements rose 3.7 percent from September to October to 114.1. It was the highest reading since March 2006 and almost 32 percent above a year ago, the largest annual increase ever for the index.
Economists surveyed by Thomson Reuters expected the index would fall to 109.5.
Every region saw year-over-year gains in pending sales. And compared with September, every region but the West saw an increase.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer of future sales.
Last month, Congress extended and expanded a tax credit that helped boost sales during the summer.
Buyers who have owned their current homes for at least five years are eligible for a tax credit of up to $6,500, while first-time homebuyers — or anyone who hasn't owned a home in the past three years — would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010, and close by June 30.
Lawrence Yun, NAR's chief economist, said the weak economy and high unemployment could slow the housing recovery, but he expects home prices and conditions to stabilize by midyear.