Jan 29, 2013 | Housing Analysis
The National Association of REALTORS® (NAR) reports that the Pending Home Sales Index fell 4.3 percent in December as compared to the month prior. The index now reads 101.7.
The Pending Home Sales Index measures the number of U.S. homes that have gone “into contract”, but have not yet closed. The report is based on data collected from local real estate associations, and from national brokers.
Despite December’s drop, however, the annual rate at which contracts for a home purchase were drawn increased 6.9 percent from one year ago, and marked the 20th consecutive month of annual purchase contract gains.
NAR reports that 80% of homes under contract are closed with 60 days, with the majority of the remained homes “sold” within months 3 and 4.
Analysts believe that December’s Pending Home Sales Index drop is not a result of a weakening housing market. Rather, it’s a function of a falling national home supply; in particular, a shortage of homes in the West Region offered a prices under $100,000.
The national housing inventory is currently at an 11-year low. However, regionally, results varied :
- Northwest : -5.4 percent from November; +8.4 percent from one year ago
- Midwest : +0.9 percent from November; +14.4 percent from one year ago
- South : -4.5 percent from November; +10.1 percent from one year ago
- West: -8.2 percent from November; -5.3 percent from one year ago
Although December’s Pending Home Sales Index dropped as compared to November, the year-to-year growth of pending home sales suggests a broader improvement in the U.S. housing market. Furthermore, the index is a strong indicator of existing home sales, which means that this season’s home sales should outpace those from 2012.
The Pending Home Sales Index is bench-marked to 100, the value from 2001, which was the index’s first year of existence. 2001 was considered a strong year for the housing market so last month’s 101.7 is considered a positive measure for the housing market.
Analysts project a strong Spring market in Massachusetts and nationwide.
Nov 30, 2012 | Housing Analysis
Homes were sold at a furious pace last month.
According the National Association of REALTORS® (NAR), the Pending Home Sales Index rose 5.2 percent in October, crossing the benchmark 100 reading, and moving to 104.8.
It’s a 5-point improvement from September’s revised figure and the highest reading April 2010 — the last month of that year’s federal home buyer tax credit.
October also marks the 18th consecutive month during which the index showed year-to-year gains.
As a housing market metric, the Pending Home Sales Index (PHSI) differs from most commonly-cited housing statistics because, instead of reporting on what’s already occurred, it details what’s likely to happen next.
The PHSI is a forward-looking indicator; a predictor of future sales. It’s based on signed real estate contracts for existing single-family homes, condominiums, and co-ops. Later, when the contract leads to a closing, the “pending” home sale is counted in NAR’s monthly Existing Home Sales report.
Historically, 80 percent of homes under contract, and thus counted in the Pending Home Sales Index, will go to settlement within a 2-month period, and a significant share of the rest will close within months 3 and 4. The PHSI is a predictor of Existing Home Sales.
Regionally, the Pending Home Sales Index varied in October 2012 :
- Northeast Region : 79.2; +13 percent from October 2011
- Midwest Region : 104.4; +20 percent from October 2011
- South Region : 117.3; +17 percent from October 2011
- West Region : 105.7; +1 percent from October 2011
A Pending Home Sales Index reading of 100 or higher denotes a “strong” housing market.
Of course, with rising home sales comes rising home values. 2012 has been characterized by strong buyer demand amid falling housing supplies. It’s one reason why the Case-Shiller Index and the FHFA’s Home Price Index are both showing an annual increase in home prices. Plus, with mortgage rates low as we head into December, the traditional “slow season” for housing has been anything but.
The housing market in Massachusetts is poised to end 2012 with strength. 2013 is expected to begin the same way.
Oct 30, 2012 | Housing Analysis
The home resales is expected to finish the year with strength.
Last month, for the fifth straight month, the Pending Home Sales Index hovered near its benchmark value of 100, registering 99.5 in September.
he Pending Home Sales Index tracks homes under contract to sell, but not yet sold, and is published by the National Association of REALTORS®. The index is a relative one. It compares today’s housing market activity to the housing market activity of 2001 — the index’s first year of existence.
The Pending Home Sales Index has averaged 99.1 this year.
Among housing market indicators, the Pending Home Sales Index is unique. It doesn’t report on prior market activity as the Existing Home Sales and New Home Sales reports do. By contrast, the Pending Home Sales Index is a forward-looking indicator.
The real estate trade association tell us that 80% of U.S. homes under contract go to closing within 60 days, and many of the rest go within Months 3 and 4. In this way, the monthly Pending Home Sales Index can foreshadow to today’s Worcester County area home buyers and sellers what’s next for housing.
Based on September’s Pending Home Sales Index, then, we should expect to see closed home sales stay strong through November and December. That said, home sales are expected to vary by region.
Here is how the Pending Home Sales Index broke down by area last month as compared to one year ago on a seasonally-adjusted, annualized basis :
- Northeast Region : +26.1% from September 2011
- Midwest Region : +19.3% from September 2011
- South Region : +17.6% from September 2011
- West Region : +0.8% from September 2011
Often, the last few months of a year are considered to be a “slow” period for the housing market. Based on regional, annual Pending Home Sales Index improvements, though, 2012 may be different. The market looks poised to finish with momentum that may carry home prices higher into 2013.
For today’s home buyers, mortgage rates remain low and home prices have only started to climb.
Sep 28, 2012 | Housing Analysis
Nationwide, homes continue to sell briskly.
According to the National Association of REALTORS®, the Pending Home Sales Index read 99.2 for August — the fourth straight month in which the index hovered near its benchmark value of 100.
A “pending home” is a home that is under contract to sell, but has not yet closed. The index measures with fair accuracy the future strength of the U.S. housing market.
For today’s Massachusetts home buyers, the August Pending Home Sales Index is relevant for several reasons.
First, the index remains near its highest point since April 2010, the last month of that year’s federal home buyer tax credit. This implies that the current housing market is performing nearly as well as the “stimulated” market of two years ago — except without the accompanying federal stimulus.
The housing market is standing on its own, in other words.
Second, the Pending Home Sales Index suggests that today’s housing market is among the strongest of the last decade. We can make this inference because the Pending Home Sales Index is a relative index, benchmarked to the value of “100” which represents the housing market as it behaved in 2001.
2001 was strong year in housing. With today’s Pending Home Sales Index remaining near 100, it tells us that 2012 is similarly strong.
And, third, the Pending Home Sales Index is relevant because it’s a forward-looking housing metric — one of the few that are regularly published. As compared to the Case-Shiller Index or Existing Home Sales report which both report on how housing fared in the past, the Pending Home Sales Index projects 30-60 days to the future.
Based on August data, therefore, we can expect for home sales volume to remain high as 2012 comes to a close.
If you’re currently shopping for a home, you’ve likely noticed a change in the market. Multiple-offer situations are more common and sellers are regaining negotiation leverage. The longer you wait to buy, therefore, the more you may pay for a home.
Read the complete Pending Home Sales Report on the NAR website.
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…)
