WASHINGTON -- The number of Americans who signed contracts to buy homes jumped in October to the highest level in a year. But the gain follows three months of declines and isn't enough to signal a housing recovery.
The National Association of Realtors said Wednesday that its index of sales agreements rose 10.4 percent last month to a reading of 93.3.
A reading of 100 is considered healthy. The last time it was that high was in April 2010, one month before a federal homebuying tax credit expired.
Contract signings usually indicate where the housing market is headed. There's typically a one- to two-month lag between a signed contract and a completed deal.
But a growing number of buyers have canceled contracts after appraisals showed the homes were worth less than the bid. A sale isn't final until a mortgage is closed.
Even with the gains, contracts to buy homes are roughly at the same level as they were before the tax credit expired, said Joshua Shapiro, chief U.S. economist at MFR Inc.
"In absolute terms, this is a very depressed level," he said.
Homes are the most affordable they've been in decades. Long-term mortgage rates are hovering near historic lows and prices in some metro areas have tumbled.
Yet, this year could be the worst year for sales since the housing bubble burst. Sales of previously occupied homes could end up being the fewest since 1997. And sales of new homes are headed for their worst year, on records dating to 1963.
Americans are holding off for a number of reasons. High unemployment and weak job growth have deterred many would-be buyers. Loans are also harder to come by. Many lenders are requiring 20 percent down payments and strong credit scores to qualify. Even those who have good credit and stable jobs are hesitant to buy because they are worried that prices will keep falling.
The number of people who signed home contracts had risen in both May and June before falling 7 percent over the past three months.
Contract signings rose across most of the country. October's index increased 24.1 percent in the Midwest, 17.7 percent in the Northeast and 8.6 percent in the South. It fell 0.3 percent in the West.
The Cities Where People Are Racing to Buy Homes
Pending Home Sales Jump to Year High
Metro movers index: 1.87
Median home price: $142,000
Home value decline from peak: -53.4%
Forecast change in home price through 2Q 2012: -11.4%
Like most of the state of Florida, the Orlando-Kissimmee-Sanford statistical area was hit hard by the housing crisis. More than one in five homes in the region is vacant, and more than half of all owned homes are now worth less than the mortgages on them. Real estate prices have declined 53.4% since the 2006 peak. By the second quarter of next year, Fiserv projects median home values will decline an additional 11.4%. For every person in the region looking for a home elsewhere, 1.87 people are looking at real estate in the area.
Click through to see what the median price buys in Orlando.
Metro movers index: 1.88
Median home price: $135,000
Home value decline from peak: -59.2% (8th biggest decline)
Unemployment: 13.6% (13th highest)
Forecast change in home price through 2Q 2012: -15.9% (2nd biggest decline)
Almost two out of every three homes with a mortgage in the Las Vegas-Paradise metropolitan area is underwater — meaning the home is worth less than the mortgage on it. This is, by far, the highest rate in the country, and it is 10 percentage points greater than the metro area with the second highest rate. Since the first quarter of 2006, the median home value has dropped nearly 60% in this statistical area, and it is expected to drop another 15.9% by the middle of next year. Nearly 40% of the homes sold in the area had previously been foreclosed upon.
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This cozy home is an economical choice whose low price sheds light on just how much of a hit Vegas took from the housing meltdown. The home offers mountain views, neat landscaping, ample lighting, access to a community pool and exercise facilities, marble kitchen countertops, a two-car garage, a backyard patio and an decent supply of appliances.
Metro movers index: 1.92
Median home price: $400,000 (9th highest)
Home value decline from peak: -39.9%
Forecast change in home price through 2Q 2012: -6%
The Oxnard-Thousand Oaks-Ventura area of California forms part of the Los Angeles suburbs, and is one of the wealthier regions in the country. It also features some of the most expensive and desirable retirement homes in the country. The median home value is $400,000 — the ninth-highest in the U.S. But even that high price is nearly 40% down from its peak in the second quarter of 2006. Foreclosures in the region are up 24% from last quarter. Many wealthy individuals close to retirement are looking to this area for second homes at bargain prices.
Click through to see what the median price buys in Ventura.
Location: Ventura, Calif.
Sq Ft: 1,878
Ventura, Calif. is a tad more upscale than some other buying hotspots, so it follows that homes are costlier. This 1,878-square-foot single family features a garage, patio and fenced backyard.
Metro movers index: 1.97
Median home price: n/a
Home value decline from peak: -5.9%
Forecast change in home price through 2Q 2012: +2.7%
Fort Worth is unlike most of the areas on our list in some key respects. It is the only one of the 10 where home prices are expected to rise by the second quarter of next year, and the only city with an unemployment rate below the national average. The subprime mortgage crisis appears to have completely missed the Fort Worth area altogether. Home prices are down just 5.9% from their peak in 2009. According to Trulia, the biggest reason for the high rate of inbound searches is the large number of people looking to move from the nearby city of Dallas.
Click through to see what the median price buys in Fort Worth.
This new traditional offers quite a bit of space for its price tag and enjoys some charming landscaping. The home shows just how much bang for your buck home buyers enjoy if they opt for this city in the Lone Star State.
Metro movers index: 1.99
Median home price: $205,000
Home value decline from peak: -50.2%
Forecast change in home price through 2Q 2012: -9.6% (19th biggest decline)
Homes in the West Palm beach area are worth less than half what they were before the recession. Many people have been unable to sell their homes, especially as values are projected by Fiserv to decline an additional 9.6% by the second quarter of 2012. Last year, West Palm Beach had more listings than all but a handful of major U.S. cities. However, inventory will likely be drawn down as foreclosures decline and people begin purchasing dirt-cheap real estate. Nearly one in four of the home sales in the region in the last 12 months was on a formerly foreclosed upon home.
Click through to see what the median price buys near West Palm.
You can live on the water for just over $200K if you purchase this gleaming, tile-floored condo. The unit offers three bedrooms and access to facilities including an expansive swimming pool and tennis courts.
Metro movers index: 2.09
Median home price: $106,000
Home value decline from peak: -59.3% (7th biggest drop)
Forecast change in home price through 2Q 2012: -12.2% (6th biggest decrease)
There is arguably no single housing market with a worse outlook than southwest Florida, and Cape Coral-Fort Myers is the hardest-hit area. Housing prices here have already dropped 59.3% from their peak, and Fiserv projects a further decline of 12.2% by the second quarter of next year. According to Corelogic, 47% of the homes in the Cape Coral-Fort Myers area are worth less than their mortgages. Foreclosures have increased 35% in the last quarter. However, the long-term outlook may be better than these figures suggest. Real estate agents are giving “foreclosure tours” to show homes that are now worth 40% or less of what they were just five years ago, and the number of people looking for homes in the area is nearly double the number looking to leave.
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Metro movers index: 2.15
Median home price: $199,000
Home value decline from peak: -48.4%
Forecast change in home price through 2Q 2012: -9.2%
Just five years ago, the median home price in the greater Fort Lauderdale area was nearly $400,000. As of last quarter, it was less than $200,000, and still falling. Prices are projected to fall an additional 9.2% by the middle of next year. The area is, however, one of the most popular retirement destinations in the country, and many see the current lows as an opportunity to purchase a cheap second home.
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Metro movers index: 2.25
Median home price: $200,000
Home value decline from peak: -23.3%
Forecast change in home price through 2Q 2012: -1.6%
The Charleston-North Charleston area saw home prices drop nearly 23% since the 2007 peak. Nearly 10% of homes are vacant — one of the highest rates in the country. Charleston has been, and remains, a popular retirement destination. According to Trulia, most of the people looking at homes in Charleston are from other parts of the state and other southern cities.
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Sheesh, that's a lot of room for $200K! The home sits on a quarter-acre landscaped lot and enjoys vistas of a nearby river viewable from the home's backyard porch. The interior has vaulted ceilings and hardwood floors.
Metro movers index: 4.36
Median home price: $180,000
Home value decline from peak: -55.4% (14th biggest decline)
Unemployment: 13.4% (15th highest)
Forecast change in home price through 2Q 2012: -14.8% (3rd biggest decline)
This is one of the largest metropolitan statistical areas in the U.S. It also has one of the highest unemployment rates in the country — 13.4%. Poor economic conditions have led to a massive drop of over 55% since home prices peaked in 2006. Prices are projected to fall an additional 14.8% by the second quarter of 2012. The area has had massive foreclosures in the past few years, and nearly 40% of the homes sold in the last 12 months were previously foreclosed upon.
Click through to see what the median price buys in San Bernardino.
Metro movers index: 6.03
Median home price: $170,000
Home value decline from peak: -51.4%
Forecast change in Home price through 2Q 2012: -6.5%
Last quarter, the rate of foreclosures in the North Port-Bradenton-Sarasota area jumped 57%, the third-greatest increase in the country. Since the first quarter of 2006, home prices have dropped 51.4%. Foreclosures are likely to increase for some time unless economic conditions improve, as 40.84% of regional homeowners owe more on their mortgages than their homes are worth. Further, prices are expected to drop an additional 6.5% by the second quarter of next year. For every person looking to leave the area, six others are searching for homes here.
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At $88 per square foot this home -- which may have given its builder quite the headache since it was constructed just prior to housing meltdown -- seems like quite a bargain. It offers the usuals and a two-car garage. Throw some palm trees into the mix too.