Home Sales Contracts Continue to Rise

The National Association of Realtors® (NAR)rnannounced on Thursday that pending home sales in November reached the highestrnlevels seen in 19 months.  The NARrnPending Sales Index, generally seen as a leading indicator of the level ofrnsales over the next 30 to 90 days, increased 7.3 percent from October figuresrnto an index of 100.1 and is 5.9 percent above November 2010 when the index wasrn94.5.  </p

The November reading is the highestrnsince April 2010 when it reached 111.5 near the end of eligibility for thernpopular homebuyers tax credit which expired the following June 30.  The Pending Home Sales Index is based on signedrncontracts for home purchases and does not reflect transaction closings.</p

Lawrence Yun, NAR chief economist, said therngains may result partially from delayed transactions.  “Housingrnaffordability conditions are at a record high and there is a pent-up demandrnfrom buyers who’ve been on the sidelines, but contract failures have beenrnrunning unusually high.  Some of the increase in pending home salesrnappears to be from buyers recommitting after an initial contract ran into problems,rnoften with the mortgage,” he said.</p

Pending sales increased in every region.  In the Northeast the index was up 8.1 percentrnto 77.1 but remained 0.3percent below one year earlier.  Midwest pending contracts increased to 91.6,rnup 3.3 percent from October and 9.5 percent from November 2010.  The index was 103.8 in the South, up 4.3rnpercent month-over month and 8.7 percent year over year, and in the West thernindex surged 14.9 percent to 121.2, a 2.9 percent annual increase.   </p

Yun said,  “November is doing reasonably well inrncomparison with the past year.  The sustained rise in contract activityrnsuggests that closed existing-home sales, which are the important finalrneconomic impact figures, should continue to improve in the months ahead.” </p

NAR Said that information on pending home salesrnis not affected by the rebenchmarking the association did earlier this month onrnits existing home sales index which resulted in a restating of numbers goingrnback 5 years and a 15 percent downward adjustment to those figures.  The pending sales index uses a differentrnmethodology based directly on contract signings, and is adjusted forrnseasonality.

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