By Martin Crutsinger
AP Economics Writer
WASHINGTON (AP) -- The number of people who signed contracts to buy homes jumped in October, marking the third gain since contract signings hit a decade low.
The National Association of Realtors said last Thursday its index of sales agreements for previously occupied homes rose 10.4 percent in October. Contract signings were up in every region of the country except the West.
Homebuilder stocks surged after the report was released. Lennar Corp. rose more than 6 percent in morning trading. Toll Brothers Inc., which announced last Thursday a surprise profit in the latest quarter, increased more than 3 percent.
Economists had expected contract signings would decline, given the numerous problems facing the housing industry.
With the October gain, contract signings are 18.3 percent above June's index -- the lowest level since the private group began tracking signed contracts in 2001. Still, they remain 20.5 percent below the October 2009 level -- the highest point since May 2006, before the housing market collapsed.
A year ago, potential buyers were rushing to close deals to take advantage of a federal home-buying tax credit that initially was set to expire in November.
The tax credit was later extended to April 30. After it expired, housing activity slumped, raising concerns about how long it will take the industry to recover from a severe downturn.
Lawrence Yun, the Realtors' chief economist, said that even with the rebound in contract signings in October, housing was being held back by a number of factors from high unemployment to tighter standards on home mortgages.
"A return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help," Yun said.
In a separate report, a foreclosure listing firm said that the worst summer for home sales in decades had dampened foreclosure sales. RealtyTrac Inc. said foreclosure sales had plunged 25 percent in the July-September quarter versus activity in the April-June period, even as the average discount on distressed properties had increased.
The report on contract signings from the Realtors showed that signings were up 19.6 percent in the Northeast, 27.3 percent in the Midwest and 7.1 percent in the South. However, the West region saw a 0.4 percent drop in signings in October.
Published: Mon, Dec 6, 2010
