Pending Home Sales Show Some Life

Pending home sales spiked unexpectedly in October, according to the National Association of Realtors on Thursday. Foreclosed properties made up a large proportion of those sales. Meanwhile, retail performed well in November.

Pending home sales spiked unexpectedly in October, according to the National Association of Realtors on Thursday. Its Pending Home Sales Index was up 10.4 percent month-over-month to 89.3. In September, sales had dropped 1.8 percent compared with the month before.

This caught most everyone by surprise. Freak of the market, or harbinger of better times for the housing market? (Granted, just about anything would constitute better times.) Observers are divided on that question. The index remains 20.5 percent below a surge to 112.4 in October 2009, back in the sweet tax-credit days; that was the highest level since May 2006, when the index hit 112.6 under the influence of the housing bubble.

As usual, NAR chief economist Lawrence Yun offered a statement of optimism: “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,” he said.

Foreclosed Houses High in Proportion, Low in Price

According to foreclosure specialist RealtyTrac’s third-quarter 2010 U.S. Foreclosure Sales Report, which was released on Thursday, foreclosed houses accounted for 25 percent of all U.S. residential sales during the third quarter. Moreover, the average sales price of properties that sold while in foreclosure was more than 32 percent below the average sales price of properties not in foreclosure—up from a 26 percent discount in the previous quarter and a 29 percent discount in the third quarter of 2009.

Excellent deals for those who have the scratch to buy a house. Not so good for the valuation of nearby properties, however. The selection of foreclosed properties, though still very large, is down from this time last year, noted the report. A total of 188,748 properties nationwide sold during some stage of foreclosure—default, scheduled for auction or out-and-out REO—in the third quarter, a decrease of 25 percent quarter-over-quarter and a decrease of nearly 31 percent from the same quarter last year.

“The expiration of the homebuyer tax credit in the second quarter created a substantial dip in overall buyer demand in the third quarter,” noted James Saccacio, CEO of RealtyTrac, in a statement. “Demand for foreclosures also dipped in the third quarter, but those who did purchase a short sale or REO during the quarter were able to get the highest average foreclosure discount we’ve seen since the fourth quarter of 2005.”

Retail Numbers Surprise Everyone

Retail sales had a good November, according to a survey of 30 major chains by Thomson Reuters. Same-store sales were up a sizable 6 percent compared with the same month last year. Moreover, just about every kind of retailer joined in the bonanza—even department stores and shops that cater to the notoriously fickle teen market.

Perhaps buoyed by the retail news, Wall Street continued on its giddy way on Thursday, with the Dow Jones Industrial Average spiking upward 106.63 points, or 0.95 percent. The S&P 500 and Nasdaq were likewise full of vim, ending up 1.28 percent and 1.17 percent, respectively.