Pending Home Sales Cool after Summer Upswing

The report this morning from thernNational Association of Realtors® (NAR) on pending home sales shows continuedrnvolatility in the housing market.  Afterrnreaching a two-year peak in July, the NAR’s Pending Home Sales Index (PHSI)rnfell in August to 99.2 percent from the revised estimate of 101.9 in July.  August numbers are still slightly more thanrn10 percent higher than in August 2011 when the Index was at 89.6.</p

The PHSI is a forward-looking indexrnbased on contract signings.  Actual salesrnof the contracted homes are generally expected within 60 to 90 days of signing.</p

July had seen the most contract activityrnsince April 2010 when buyers were rushing to beat the deadline for the homernbuyer tax credit.  The current reportrnrevised the July Index number upward from 101.7.</p

Lawrence Yun, NAR chief economist, said some volatilityrncan be expected in the monthly readings.  “The performance inrnmonth-to-month contract signings has been uneven with ongoing shortages ofrnlower priced inventory in much of the country, and across most price ranges inrnthe West, but activity has remained at notably higher levels this year,” Yun said. rn</p

“The indexrnshows 16 consecutive months of year-over-year increases, and that hasrntranslated into a higher number of closed sales. Year-to-date existing-homernsales are 9 percent above the same period last year, but sales were relativelyrnflat from 2008 through 2011,” Yun added.</p

NAR expects existing-home sales to rise 9 percent this year to 4.64 million andrnanother 8 percent in 2013 to nearly 5.02 million.  With generally balancedrninventory conditions in many areas, the median existing-home price is projectedrnto rise about 5 percent in both 2012 and 2013.</p

The August diprnwas felt almost nationwide.  The PHSIrnrose 0.9 percent to 78.2 in the Northeast region which is 19.9 percent abovernthe level in August 2011.  Pending salesrndipped in the other three regions, down 2.6 percent to 95.0 in the Midwestrnwhich also remained 19.9 percent higher year-over-year, and 1.1 percent in thernSouth.  That region’s index was 110.4 inrnAugust, 13.2 percent above one year earlier. rnTight inventories were blamed for a 7.2 percent decline in the Augustrnindex, now 4.2 percent below one year earlier.

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