US: Pending Home Sales Jumped In October

December 5th, 2010 | by linda smit |

Pending home sales jumped 10.4 percent in October, but we are skeptical of the spike in activity. The increase was concentrated in the Northeast and Midwest, where unseasonably mild weather likely boosted activity.

Seasonal Factors Likely Distorted Pending Home Sales

  • Pending home sales soared 10.4 percent in October, with huge increases in the Midwest and Northeast.
  • The extremely low level of home buying activity in the Northeast and Midwest makes October’s spike appear somewhat suspect. Unseasonably mild weather and low interest rates likely brought buyers back into the market, but the gains were likely exaggerated by seasonal adjustment.

At These Low Levels Every Move Is Magnified

  • With home buying at such low levels, the impact of seasonal adjustment is magnified significantly. This is particularly true in the fall and winter months, when home buying generally shuts down in the Northeast and Midwest.
  • The South and West are less affected by seasonal distortions and posted more believable numbers, with pending sales rising 7.1 percent in the South and falling 0.4 percent in the West.

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Tags: Home Sales, Home Sales Jumped, October, Sales Jumped

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