Pending Home Sales Increase

The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 5.9 percent in May 2012, from 95.5 in April.  At this level, the PHSI equaled the level of March 2012, and reached the highest level since the expiration of the home buyer tax credit in April 2010. The May PHSI was 13.3 percent higher than in May 2011.   

The National Association of Realtors (NAR) reported that the May PHSI was up in all regions from last month and last year. The monthly increases were 4.8 percent in the Northeast, 6.3 percent in the Midwest, 1.1 percent in the South and 14.5 percent in the West. The year over year increases were 19.8 percent in the Northeast, 22.1 percent in the Midwest, 11.9 percent in the South and 4.8 percent in the West.  These regional numbers roughly reflect the May new home sales report, which suggested housing demand strength for the Northeast but lackluster improvement in the West.    

 

If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what is likely to happen with existing home sales when the contracts close in coming months. We anticipate that June and July existing sales that will be reported on July 19, 2012 and August 22, 2012, will reflect the strength of today’s pending sales report.

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6 Responses to Pending Home Sales Increase

  1. John White says:

    It seems that the gains in this particular statistic have not translated into similar gains in actual closed sales. This is likely due to a higher than normal contract cancellation rate due to low appraisals and tighter credit standards.

  2. [...] annual rate. However, this rate marks an increase of more than 9% year over year. Nonetheless, the NAR Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 5.9% …, its highest level since the expiration of the federal home buyer tax credit [...]

  3. [...] annual rate. However, this rate marks an increase of more than 9% year over year. Nonetheless, the NAR Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 5.9% …, its highest level since the expiration of the federal home buyer tax credit [...]

  4. [...] May 2012 Pending Home Sales Index increased 5.9 percent from April.  So it was expected that existing home sales would increase in [...]

  5. [...] The May 2012 Pending Home Sales Index increased 5.9 percent from April.  So it was expected that existing home sales would increase in June and July. The decrease in June 2012 existing sales suggests an increase in next month’s existing sales, which would be consistent with the pattern between existing home sales and the Pending Home Sales Index. [...]

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