Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained.
The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8 after a revised 0.4 percent gain in September, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.
The lowest mortgage rates on record, stable prices and waning foreclosures are helping underpin sales three years after the last recession ended. Federal Reserve policy makers have targeted the industry with purchases of mortgage-backed securities as they seek to bolster the labor market and the expansion.
“As folks start to feel a little more comfortable about their home price, they’re going to put it on the market and you’re going to start to see this trend continue” of higher sales, Anika Khan, a Charlotte, North Carolina-based senior economist at Wells Fargo & Co., said before the report. “We still see the overall residential market continuing to add to growth in the coming quarters.”
Estimates in the Bloomberg survey ranged from a 1 percent drop to a 4 percent gain. The prior month’s figure was originally reported as a 0.3 percent advance. Compared with a year earlier, the index increased an unadjusted 18 percent after an 8.7 percent gain in the 12 months ended in September. After seasonal adjustment, pending purchases climbed 13.2 percent from a year ago.
Stocks held gains after the figures and amid optimism lawmakers will reach a budget deal. The Standard & Poor’s 500 Index climbed 0.5 percent to 1,416.47 at 10:08 a.m. in New York.
“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 home buying now that home prices have clearly turned positive,” Lawrence Yun, chief economist at the Realtors’ group, said in a statement.
A report from the Commerce Department showed the economy in the third quarter expanded more than previously estimated as a narrower trade deficit and gains in inventory overshadowed a smaller increase in consumer spending. Gross domestic product rose at a 2.7 percent annual rate, up from a 2 percent previous estimate, the agency said. Household purchases climbed at a 1.4 percent rate, the slowest in more than a year.