US Pending Home Sales Index rises for ninth consecutive month

The National Association of Realtors (NAR) said its Pending Home Sales Index rose to 114.1 in October - its ninth consecutive monthly rise.

The index is up 31.8% from this time last year - the biggest year-on-year gain since the series began in 2001.

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.

The tax credit was set to expire on November 30 but the Government recently extended the incentive until 30 April.

Commenting on the figures, NAR economist Lawrence Yun, said: “The credit is helping unleash a pent-up demand from a large pool of financially qualified renters.”

“The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months,” added Yun.

In the meantime, separate data showed growth in US manufacturing for the fourth consecutive month in November, albeit at a slower rate.

The Institute for Supply Management (ISM) said its factory index fell from 55.7% in October to 53.6 in November - however, any figure above the 50 mark represents growth in the sector.

Norbert Ore, chairman of the ISM manufacturing business survey committee in Atlanta, Georgia, comments: “We’re basically four months into a somewhat weak recovery. It will take a while to spread across 18 manufacturing industries.”

Meanwhile, the ISM report’s employment index for the manufacturing industry fell from 53.1 in October to 50.8 in November.

Mr Ore comments: “Given the number of manufacturing jobs lost and the number of facilities closed, rarely are those reopened. It will take more growth than we’re seeing right now to create significant growth in manufacturing jobs.”

The Dow Jones index closed up 126.66 points (1.2%) yesterday to 10,471.50 points, following the positive economic data.

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