Pending sales of homes drop slightly in October

Pending U.S. home sales fell only slightly in October, despite a spate of bad economic news and turmoil in the stock markets, the National Assn. of Realtors reported Tuesday.

The group’s seasonally adjusted index of pending sales for pre-owned homes fell 0.7% from September to a reading of 88.9, beating economists’ average estimate of 86.5, according to a Thomson Reuters survey. The index was 1% below October’s reading a year earlier.

Home sales have rebounded in recent months in large part because of deeply discounted foreclosures and distressed sales, which account for up to 40% of all transactions, according to the Realtors group.

Home sales are considered pending when the seller has accepted an offer but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

An index reading of 100 is equal to the average level of sales activity in 2001, when the index started. It sunk to a record low of 83 in March.

Although conditions are uneven around the country, the Realtors association noted that pending home sales were showing gains in some areas, including in Florida and California markets, Providence, R.I., and Las Vegas.

The pending home sales index posted annual declines in every region but the West, which saw a 17.4% increase.

Weiss Research Inc. analyst Mike Larson noted that government attempts to drive down mortgage rates were having some success. Rates have been below 6% in recent days.

“Lower prices in some of the hardest-hit markets, and almost irresistible bargains on distressed properties, are also bringing some buyers out of the woodwork,” Weiss Research analyst Mike Larson said.

Separately, the Realtors group estimated U.S. sales of pre-owned homes would total 4.96 million this year, compared with 5.65 million in 2007.