Pending Home Sales Highest in Nearly a Year

Favorable housing conditions wererncredited for leading pending home sales higher in July to their best levelrnsince August 2013.   Pending sales asrnmeasured by purchase contract signings rebounded from a slight dip in June thatrninterrupted three straight months of steady gains.  </p

The Pending Home Sales Index (PHSI)rncompiled by the National Association of Realtors (NAR) rose 3.3 percent torn105.9 from 102.5 in June but is still 2.1 percent below the July 2013rnlevel.  It is the third straight monthrnthe Index has been above 100, considered an average level of contractrnactivity.  The gains were broad-basedrnwith only a slight decline in the Index in the Midwest.</p

LawrencernYun, NAR chief economist, said, “Interest rates are lower than they wererna year ago, price growth continues to moderate and total housing inventory isrnat its highest level since August 2012. rnThe increase in the number of new and existing homes for sale isrncreating less competition and is giving prospective buyers more time to reviewrntheir options before submitting an offer.”</p

NAR said the total housing inventory in July, at 2.37 million existing-homesrnavailable for sale, was the highest since August 2012.  At that time the inventory contained 2.40rnmillion homes</p

Yun added, “More importantly, steady job additions to the economy arernhelping family finances and giving them added confidence to enter the market.”</p

The Pending Home Sales Index is a leading indicator for the housing sector,rnbased on pending sales of existing homes. A sale is listed as pending when therncontract has been signed but the transaction has not closed, though the salernusually is finalized within one or two months of signing.</p

Pending sales in the Northeast jumped 6.2 percent to 89.2 in July, and thernIndex is 8.3 percent above a year ago. In the Midwest the index fell a marginalrn0.4 percent to 104.6 and is 6.4 percent below July 2013.  </p

Pending home sales in the South increased 4.2 percent to an index of 119.0, 1.0rnpercent below a year ago. The index in the West rose to 99.5, an increase of 4.0rnpercent, but remains 6.0 percent below July 2013.</p

Yun is projecting that existing-homes sales will be 2.1 percent lower thanrnin 2013, 4.98 million compared to 5.09 million units.  The national median existing-home price isrnprojected to grow between 5 and 6 percent this year and 4 and 5 percent nextrnyear.</p

The PHSI is based on a large national sample, typically representing aboutrn20 percent of transactions for existing-home sales.  An index of 100 is equal to the average levelrnof contract activity during 2001, which was the first year to be examined. Byrncoincidence, the volume of existing-home sales in 2001 fell within the range ofrn5.0 to 5.5 million, which is considered normal for the current U.S. population.

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