The number of home sales contracts signed soared in August, the National Association of Realtors reported this morning. Pending home sales, a leading indicator because contracts are typically signed a couple months before closings, increased 7.4% compared to July’s revised number and 8.8% compared to August 2007.
Sales are largely increasing because people are picking up foreclosed homes and other distressed properties at bargain prices, especially in the worst-hit markets: California, Florida, Nevada, Rhode Island, and Arizona.
Of course, this surge in sales doesn’t reflect the worsening situation in the credit markets after the Wall Street meltdown last month. We’ll have to wait until next month to see how that might impact the market’s ability to climb out of the worst housing crisis in decades.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.