Pending Home Sales Highest in 13 Months

Pending home sales, while increasingrnonly slightly in September, exceeded those of a year earlier, the first time inrn11 months this has occurred. The National Association of Realtors® (NAR) alsornsaid that its Pending Home Sales Index (PHSI), which rose 0.3 percent to 105.0rnis at its second-highest level since last August.</p

The index is a forward indicator basedrnon contracts signed for the purchase of a home. rnThe September reading is 1.0 higher than in September 2013 and it is thernfifth consecutive month in which the PHSI has exceeded 100.  Contract signings are generally expected tornturn into home sales within 60 to 90 days.</p

Lawrence Yun, NAR’s chief economist, says moderating price growth and sustainedrninventory levels are keeping conditions favorable for buyers. “Housing supplyrnfor existing homes was up in September 6 percent from a year ago, which isrnpreventing prices from rising at the accelerated clip seen earlier this year,”rnhe said. “Additionally, the current spectacularly low mortgage rates shouldrnhelp more buyers reach the market.”  </p

NAR said thatrneven with improved inventory and continued low interest rates many would-bernbuyers are still encountering problems with financing.  When queried about reasons that pending salesrnhave not closed, about 15 percent of NAR members cited their customers’ problemsrnwith obtaining mortgage financing.</p

Yun says thernfinal rule on Qualified Residential Mortgages should improve access to creditrnonce it goes into effect next year. “The rule provides clarity for lenders andrnis a win for creditworthy consumers by ensuring they continue to have access tornsafe and affordable loan products without overly burdensome downpaymentrnrequirements,” he said. </p

The PHSIrnincreased 1.2 percent in the Northeast to 87.5 in September, and is now 2.9rnpercent above a year ago. In the Midwest the index was down 1.2 percent torn101.2 in September, and is now 4.0 percent below September 2013.  </p

Pending homernsales in the South increased 1.4 percent to an index of 118.5 in September, 1.7rnpercent higher than a year earlier and in the West they inched back 0.8 percentrnfrom the August number to 101.3.  Thisrnwas still 3.6 percent higher than a year ago.</p

NAR’s index isrnbased on a large national sample, typically representing about 20 percent ofrntransactions for existing-home sales. The index has a base of 100 which isrnequal to the average level of contract activity during 2001, the first year tornbe examined. By coincidence, the volume of existing-home sales in 2001 fellrnwithin the range of 5.0 to 5.5 million, which is considered normal for therncurrent U.S. population. In developing the model for the index, it wasrndemonstrated that the level of monthly sales-contract activity parallels thernlevel of closed existing-home sales in the following two months.

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