Pending Home Sales Surge; Construction Spending Also Up
Pending sales of existing U.S. homes rose sharply in August, for a seventh consecutive month of gains, reaching the highest since March 2007, data from a real estate trade group showed Thursday.
A separate report showed US construction unexpectedly rose at its fastest pace in nearly a year in August, with investment in private residential construction notching its biggest increase in almost 16 years.
The National Association of Realtors Pending Home Sales Index, based on contracts signed, was up 6.4 percent to 103.8, the longest consecutive month-on-month gain in the history of the series, which began in 2001. The index rose from a reading of 97.6 in July and is 12.4 percent above August 2008's level of 104.5.
Economists polled by Reuters had been expecting pending home sales to rise, but by only 1.0 percent. NAR senior economist Lawrence Yun noted that not all contracts are turning into closed sales within an expected timeframe. "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," he said in a statement.
The Commerce Department said separately that spending on construction projects rose 0.8 percent, the largest increase since September 2008, after a revised 1.1 percent drop in July that was previously reported as a 0.2 percent decline. Analysts polled by Reuters were expecting a 0.l percent fall in overall construction spending in August. Compared to August a year ago, construction spending was down 11.6 percent.
Private construction spending rose 1.8 percent in August, also the biggest gain since September 2008, from a 1.4 percent decline in July. Private residential construction surged 4.7 percent, the largest advance since November 1993, after 0.6 percent rise the prior month. The rise in private residential construction will bolster views that a housing market recovery is under way after a three-year slump, and bodes well for a third-quarter rebound in economic growth. Spending on public construction fell 1.1 percent in August after slipping 0.7 percent in July.