US pending home sales index rises to 3-year high

The National Association of Realtors (NAR) said its Pending Home Sales Index rose to 110.1 in September - its eight consecutive monthly rise.

The index now stands at the highest level since December 2006 when it was 112.8.

The index is 21.2% higher than September last year when it was at the 90.9 mark and the annual gain is the largest on record.

However, many analysts believe that the US housing market is being propped up by the $8,000 tax credit for first-time buyers, which was introduced by the Government to boost demand for houses.

According to Lawrence Yun, NAR chief economist, “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month.”

In the meantime, separate data showed a rise in US manufacturing for the month of October.

The Institute for Supply Management said its factory index jumped to 55.7% in October from 52.6% in September - any figure above the 50 mark represents growth in the sector.

Last week, official figures revealed that the US economy expanded at an annualised rate of 3.5% between the July and September period, suggesting that the economy has exited its worst recession in 70 years.

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