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Homebuyers were Busy in January; Pending Sales Rise
Even though sales of existing homes dropped by 4.9 percentrnin January buyers were apparently out shopping and seriously so. The National Association of Realtors® said that its PendingrnHome Sales Index (PHSI) climbed to 104.2 in January, a 1.7 percent increase</bfrom December and the highest level for the index since August 2013.</p
The January PHSI was 8.4 percent higher than the one for Januaryrn2014. It was the fifth consecutive monthrnof year-over-year gains and NAR said that each month has accelerated the annualrngain from the prior month. In additionrnthe December number was revised upward from 100.7 to 102.5, erasing about halfrnof the previously reported 3.7 percent November to December loss.</p
PHSI is a forward-looking indicated based on contract signingsrnfor home purchases. These contracts generallyrnclose as sales within 60 days to 90 days. </p
Lawrence Yun, NAR chief economist, said that the elevated number of pendingrnsales despite continuing tight supplies of available homes highlights thernunderlying demand that exists in today’s market. “Contract activity isrnconvincingly up compared to a year ago despite comparable inventory levels,” hernsaid. “The difference this year is the positive factors supporting strongerrnsales, such as slightly improving credit conditions, more jobs and slower pricerngrowth.”</p
Yun also points to more favorable conditions for traditional buyers enteringrnthe market. All-cash sales and sales to investors are both down from a year ago,</bcreating less competition and some relief for buyers who still face thernchallenge of limited homes available for sale.</p
“All indications point to modest sales gains as we head into the springrnbuying season,” says Yun. “However, the pace will greatly depend on how muchrnupward pressure the impact of low inventory will have on home prices.rnAppreciation anywhere near double-digits isn’t healthy or sustainable in therncurrent economic environment.”</p
All major regions except for the Midwest saw gains in activity in January. In the Northeast pending sales inched up 0.1rnpercent to 84.9 in January, and are now 6.9 percent above a year ago. In thernMidwest the index decreased 0.7 percent to 99.3 in January, but is 4.2 percentrnabove January 2014.</p
The South saw the largest increase, up 3.2 percent to an index of 121.9 inrnJanuary and the highest level since April 2010. rnThe index was 9.7 percent higher than in January 2014. The index in thernWest rose 2.2 percent in January to 96.4 and is 11.4 percent above a year ago.</p
Total existing-homes sales in 2015 are forecast to be around 5.26 million,rnan increase of 6.4 percent from 2014. The national median existing-home pricernfor all of this year is expected to increase near 5 percent. In 2014,rnexisting-home sales declined 2.9 percent and prices rose 5.7 percent.
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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