Pending Home Sales Highest Since 2010 Tax Credit

by devteam February 27th, 2013 | Share

Pending home sales rose on both arnmonthly and an annual basis in January. rnThe National Association of Realtors® (NAR) which compiled the data saidrnJanuary was the 21st consecutive month when its Pending Home SalesrnIndex was higher than one year earlier.</p

The Index increased 4.5 percent fromrn101.3 in December to 105.9 and was 9.5 percent above January 2012 when it wasrn96.7.  The Index is a forward lookingrnindicator based on contract signings for home purchases.  The contract is generally expected to convertrnto a home sale in about 60 days.</p

The January index is at the highestrnlevel since just before the deadline for the home buyer tax credit in Aprilrn2010 when it hit 111.9 and February 2007rnwhen it reached 107.9 in a less artificial market.</p

Lawrence Yun, NAR chief economist, said inventory is the key tornthis year’s housing market.  “Favorable affordability conditions and jobrngrowth have unleashed a pent-up demand.  Most areas are drawing downrnhousing inventory, which has shifted the supply/demand balance to sellers inrnmuch of the country.  It’s also why we’re experiencing the strongest pricerngrowth in more than seven years,” he said.</p

“Over the nearrnterm, rising contract activity means higher home sales, but total sales for thernyear are expected to rise less than in 2012, while home prices are projected tornrise more strongly because of inventory shortages,” Yun said.</p

Pending salesrnwere up on a regional basis in all four regions although Yun said that oncernagain the lack of inventory is constraining activity in the West.  That region eked out a 0.1 percent monthlyrnincrease to 102.1 but year-over-year sales were down 1.5 percent.  The Index was up 8.2 percent on a monthlyrnbasis and 10.5 percent year-over-year to 84.8 in the Northeast, 4.5 percent andrn17.7 percent to 105.0 in the Midwest and 8.9 percent and 11.3 percent in thernSouth to an index of 119.3. </p

Yun expectsrnapproximately 5.0 million existing-home sales this year, 543,000 of which willrnbe new homes.  However, price growth could exceed a 7 percent gainrnprojected for 2013 if inventory supplies remain low.  Previously, NAR hadrnexpected 5.1 million existing-home sales in 2013, while prices were forecast tornrise 5.5 to 6.0 percent.   The NAR isrnalso forecasting 1.13 million housing starts this year.</p

NAR also released the revisedrnPending Home Sales Index for all of 2012. rnThe Index, while experiencing small and occasional decreases trendedrnfairly steadily upwards through the year, starting at 96.7 in January andrnending the year at 101.3.  The high forrnthe year was 103.8 in October. 

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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