Another quick update here:
This morning the National Association of Realtors released its Pending Home Sales Index for October. The NAR found that the index rose 10.4 percent to 89.3. Despite the increase the index remains 20.5 percent below its most recent peak in October 2009.
Lawrence Yun, chief economist for the NAR commented:
“It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels. The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011″.
I agree that it is nice to see some positive news out of the housing market. However, I would probably take issue with the idea that the housing market is “clearly in a recovery phase”. To me that seems like a bit of an overreach, given that there are about 6.3 million unsold homes in the United States (4.2 million in “visible inventory” and another 2.1 million in “shadow inventory”, according to Core Logic), and demand for these homes is still very low. Nearly everybody (from Case-Shiller, to CoreLogic, to Freddie Mac) is predicting that housing prices will continue to weaken in 2011.
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