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Pending home sales increased for the seventh straight month in August, according to a report released by the National Association of Realtors on Thursday, with the pace of growth for the month exceeding economist estimates.
NAR said its pending home sales index rose 6.4 percent to 103.8 in August from a reading of 97.6 in July. With the increase, the index rose to its highest level since March of 2007. Economists had been expecting a much more modest increase of about 1.0 percent.
A pending sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
However, Lawrence Yun, NAR chief economist, said not all contracts are turning into closed sales within an expected timeframe.
Yun said, "The rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules."
"No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month," he added.
The bigger than expected increase in pending home sales reflects increases in all four regions of the country, with pending home sales in the West showing a notable 16.0 percent increase.
Pending home sales in the Northeast and Midwest increased by 8.2 percent and 3.1 percent, respectively, while pending sales in the South edged up by a more modest 0.8 percent.
Yun said, "There is likely to be some double counting over a span of several months because some buyers whose contracts were cancelled have found another home and signed a new contract to buy."
"Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being cancelled? Without historic precedents, it's challenging to assess," he added.
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