Pending Home Sales Rise to Highest Level Since April 2010-NAR

Pendingrnhome sales in January reached a level last seen at the height of the homebuyerrntax credit bubble nearly two years ago according to information released thisrnmorning by the National Association of Realtors® (NAR,) and its chief economistrnmade some optimistic predictions for the future.  The Pending Home Sales Index rose 2.0 percentrnto 97.0 compared to the revised December number and is 8.0 higher than one yearrnearlier when it was 89.8.  December’srnnumber had originally been estimated at 96.6 but was revised down to 95.1 withrnthis release.  </p

ThernIndex is a forward looking indicator based on contracts for home purchases thatrnhave been signed but where the transaction has not closed.  It is generally expected that pending salesrnwill be finalized within two months.   </p

ThernJanuary number is the highest for the index since April 2010 when buyers werernrushing to take advantage of the home buyer tax credit.  That month the Index reached 111.3. </p

NAR chiefrneconomist Lawrence Yun said this is a hopeful indicator going into the springrnhome-buying season.  “Given morernfavorable housing market conditions, the trend in contract activity implies wernare on track for a more meaningful sales gain this year.  With a sustained downtrend in unsoldrninventory, this would bring about a broad price stabilization or even modestrnnational price growth, of course with local variations.”</p

Whilernacknowledging that the movement of the index has been uneven, due mainly torntight credit, Yun said, “job gains, high affordability and rising rents arernhopefully pushing the market into what appears to be a sustained housingrnrecovery. If and when credit availability conditions return to normal, homernsales will likely get a 15 percent boost, speed up the home-price recovery, andrnthereby significantly reduce the number of homeowners who are underwater.”</p

On a regionalrnbasis the Index for the Northeast was 78.2, an increase of 7.6 percent overrnDecember and 9.8 percent from one year earlier. rnPending Sales in the South rose 7.7 percent to 109.1, 10.5 percentrnhigher than the previous year.  The Indexrnin the Midwest was down 3.8 percent to 88.1 but increased on an annual basis byrn10.8 percent and in the West there was a decrease of 4.4 percent in January torn101.9, 0.7 percent higher than in January 2011. rn</p

 The Pending HomernSale Index is based on a national sample, typically representing about 20rnpercent 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 asrnwell as the first of five consecutive record years for existing-home sales,rnthus it coincides with a level that is historically healthy.

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