Aug 30, 2012 | Housing Analysis
In July, the third time this year, the Pending Home Sales Index crossed its benchmark value of 100, moving to 101.7.
A “pending home sale” is a home under contract to sell, but not yet sold. Data for the index is collected by the National Association of REALTORS® and published monthly.
The rise in July’s Pending Home Sales Index reading is important for two reasons — both of which highlight a U.S. housing market in recovery. Buyer and sellers in Massachusetts and across the country would do well to pay attention.
First, the Pending Home Sales Index is at its highest point since April 2010, the last month of that year’s federal home buyer tax credit. (more…)
Aug 23, 2012 | Housing Analysis
Home resales climbed 2% last month as the housing market continues its measured, steady recovery.
According to the National Association of REALTORS®, Existing Home Sales rose to 4.47 million units in July on a seasonally-adjusted, annualized basis.
An “existing home” is a home that cannot be classified as new construction and, despite a reduction in the national homes inventory, the number of previously-occupied homes sold in July was higher by 10% as compared to one year ago.
The Existing Home Sales also reported the folliowing :
- First-time buyers accounted for 34% of all purchasers, down from 34% in June
- Real estate investors accounted for 16% of all purchasers, down from 19% in June
- Cash buyers accounted for 27% of all purchasers, down from 29% in June
In addition, the real estate trafde group reports that distressed sales accounted for a smaller percentage of the overall home resale market in July. Just 24% of home resales were for homes in various forms of foreclosure or short sale. (more…)
Aug 1, 2012 | Housing Analysis
According to the S&P/Case-Shiller Index, home values rose 2.2% nationwide, with all 20 tracked markets making month-to-month improvement. On an annual basis, 17 of the 20 Case-Shiller Index markets improved.
Despite the positive report, however, our enthusiasm for the May Case-Shiller Index should be tempered. This is because the index’s methodology is less-than-ideal for today’s Massachusetts home buyer.
There are three main reasons why :
- The Case-Shiller Index tracks values for single-family homes only
- The Case-Shiller Index is distorted by distressed, discounted home sales
- The Case-Shiller Index publishes on a 2-month lag
Perhaps even more important, though, is that the Case-Shiller Index ignores a basic tenet of the housing market — all real estate is local. It’s not possible for 20 cities to represent the U.S. housing market as a whole. Even more egregious is that the 20 markets tracked by the Case-Shiller Index don’t represent the country’s twenty most populated cities.
The Case-Shiller Index specifically excludes home sale data from Houston, Philadelphia, San Antonio and San Jose — four of the nation’s 10 most populated cities. Yet, the index does include data (more…)
Jul 27, 2012 | Housing Analysis
Home sales appear headed for a mid-summer breather.
One month after posting a multi-year high, the Pending Home Sales Index retreated to 99.3 in June — a strong reading in its own right.
A “pending home sale” is a home that is under contract to sell, but not yet sold. June’s value of 99.3 marks the 14th consecutive month during which the index showed year-to-year gains.
Last year in June, the index read 90.7.
For home buyers in Worcester County area and nationwide, the 14-month winning streak is one worth noting — specifically because the Pending Home Sales Index is different from the other housing market data that tends to make headlines.
Unlike the FHFA’s Home Price Index, for example; or the monthly New Home Sales data which both report on how housing performed in the past, the National Association of REALTORS®’ Pending Home Sales (more…)
Jul 3, 2012 | Housing Analysis
Homes are going under contract at a quickening pace.
In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.
Statistically, the Pending Home Sales Index reading is significant for two reasons.
First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in Massachusetts and nationwide is approaching the “stimulated” levels of two years ago — but without the federal stimulus.
This is a positive signal for the housing market.
Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.
2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.
And, there’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of Massachusetts — the Pending Home Sales Index is among the few “forward-looking” housing market indicators.
Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.
80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume that home sale figures will rise through the summer.
If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.
