By Ruth Mantell, MarketWatch
Last update: 10:18 a.m. EDT Oct. 8, 2008

WASHINGTON (MarketWatch) — Despite the credit crunch gripping the U.S. economy, the National Association of Realtors reported Wednesday that an index of sales contracts on previously owned homes rose 7.4% in August from the prior month.

The index, considered a leading indicator of existing-home sales, was up 8.8% from August 2007. It’s unclear to what extent contract activity will be affected by the credit disruptions on Wall Street, said Lawrence Yun, NAR’s chief economist, in a statement.
Pending home sales for August rose in all four of the regions tracked by the NAR.

Gains amounted to 18.4% in the West, 8.4% in the Northeast, 3.6% in the Midwest and 2.3% in the South.
July’s pending home sales index was revised to a decline of 2.7% from a prior estimate of a 3.2% decrease.
NAR says pending home-sales activity rose because of buyers taking advantage of low prices and affordable interest rates. August’s results show an “unleashing of pent-up demand” before the credit crisis worsened in September, Yun said.

“Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover” of Fannie Mae and Freddie Mac, Yun said. Also Wednesday, the world’s major central banks moved in concert to slash key interest rates, easing monetary policy in an ongoing struggle to head off financial turmoil that has threatened to flatten the international economy.

The coordinated rate moves saw the Federal Reserve cut its key lending rate by half a percentage point, to 1.5%. In addition, the European Central Bank trimmed its key refi rate to 3.75% from 4.25%, while the Bank of England cut its key rate to 4.5% from 5%. The Bank of Canada, the Swiss National Bank and the Swedish Riksbank cut rates as well.