Pending home sales for October slipped 1.7 percent from September and 13.2 percent from a year earlier, the NATIONAL ASSOCIATION OF REALTORS® reports.

The latest Pending Home Sales Index, based on contracts signed in October, is at a reading of 107.2. NAR says the index shows an encouraging “narrowing” trend, as the year-over-year decline is slimmer than the previous two months; In September, the index was 13.6 percent below a year earlier, while in August the decline was 14.0 percent.

David Lereah, NAR’s chief economist, says the numbers show that the market is stabilizing. A fairly steady pace of home sales can be expected for the next two months.

“It’s important to focus on where the housing market is now — it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high,” Lereah says. “They’ll stay that way through 2007.”

He adds that the temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy. “The number for this year will be the third highest on record,” he says.

The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and year-ago changes in sales performance than with month-to-month comparisons.

Regionally, the Pending Home Sales Index in the Midwest slipped 0.6 percent in October to 95.8 and was 15.4 percent below a year ago. The index in the South declined 1.7 percent to 122.9 and was 9.3 percent below October 2005. In the Northeast, the index eased 2.1 percent in October to 88.0 and was 13.5 percent lower than a year earlier. The index in the West fell 2.7 percent to 109.5 and was 17.4 percent below October 2005.

— REALTOR® Magazine Online