Pending home sales shot up to the highest level in 2-1/2 years in October, adding to a growing mound of evidence that the housing recovery is real.
The National Association of Realtors' closely watched Pending Home Sales Index, which measures contract signings for existing homes but not new ones, jumped 5.2% to 104.8 for the month, from a revised 99.6 in September, trouncing consensus views for a 1% rise.
The index, a leading indicator of home resales, is 13.2% above October 2011, when it was 92.6.
Last month's level was the highest in more than five years excluding months that spiked due to a federal homebuyer tax credit.
Some of the largest U.S. homebuilders' stocks rose after the report early Thursday, but settled later.
PulteGroup (PHM), D.R. Horton (DHI), Ryland Group (RYL) and Brookfield Residential (BRP) gained roughly 1% or less. Lennar (LEN) and KB Home (KBH) ended the day off slightly and Meritage Homes (MTH) more than 1%. Standard Pacific (SPF) was unchanged.
What's Drawing Buyers?NAR Chief Economist Lawrence Yun says buyers are responding to favorable market conditions.
"We've had very good housing affordability conditions for quite some time, but we're seeing more impact now from steady job creation and rising consumer confidence about homebuying now that home prices have clearly turned positive," Yun said in a press statement.
On a year-over-year basis, pending home sales, which reflect contracts but not closings, have risen 18 months in a row.
By region, the Northeast saw some impact from Superstorm Sandy, but it didn't affect the index much because the storm made landfall in the last few days of the month.
Activity surged in the Midwest and is healthy in the South, but was slightly down in the Northeast and West, Yun says.
The index was the latest in a series of mostly positive reports on housing this week.
Housing and construction continue to be bright spots despite lingering high unemployment and weak overall economic growth, reflected in the lofty No. 4 group ranking for the 18-company Building-Residential/Commercial group on IBD's list of 197 industries.
On Tuesday, S&P Case Shiller said its index of adjusted monthly home sales rose 0.4% in September, the third month in a row of relatively strong growth.
The same day, the Federal Housing Finance Agency issued its latest house price index, which showed prices climbed 4.7% in August vs. the same month a year earlier.
Not all is rosy. Wednesday, the Commerce Department said sales of new homes in the U.S. dipped 0.3% in October to a seasonally adjusted annual rate of 368,000, from 369,000 in September.
New-home sales fell most in the Sandy-hit Northeast. Sales in the region plunged 32.3% year over year.
- Real Estate