Pending Home Sales Up 2.4%, Reaching a Two Year High

Pending home sales rose to the highestrnlevel in over two years last month according to the Pending Home Sales Indexrnfor July released by the National Association of Realtors® (NAR) thisrnmorning.  The index was up 2.4 percent torn101.7 from 99.3 in June and was 12.4 percent higher than the 90.5 mark one yearrnearlier.</p

The Pending Home Sales Index is a forward-lookingrnindicator based on home purchase contracts signed.  The contracts are generally expected to closernwithin two months of their signing. </p

Pending Home Sales</p

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Lawrence Yun, NAR chief economist, said the index is at the highest levelrnsince April 2010, which was shortly before the closing deadline for the homernbuyer tax credit. “While the month-to-month movement has been uneven, morernimportantly we now have 15 consecutive months of year-over-year gains inrncontract activity,” Yun said.</p

Yunrnnoted that sales activity is actually being constrained by limited inventory,rnboth homes actually listed for sale and the shadow inventory.  The West in particular is suffering from anrninventory shortage.</p

Pendingrnhome sales grew in every region except the West.  The Northeast increased 0.5 percent to 77.0rnin July and was 13.4 percent above the level in July 2011.  Pending sales in the South were up 5.2rnpercent to 111.7, a 15.6 percent annual increase and the Midwest index grew 3.4rnpercent month-over-month and 20.2 percent on an annual basis to a current levelrnof 97.4.  The West slipped 1.7 percent inrnJuly to 109.9 but is still 1.3 percent higher than a year earlier. </p

NAR projects that existing-homernsales will rise 8 to 9 percent in 2012, followed by another 7 to 8 percent gainrnin 2013. Home prices are expected to increase 10 percent cumulatively over thernnext two years.</p

“Falling visible and shadowrninventories point toward continuing price gains,” Yun said.  “Expected gains in housing starts of 25 to 30rnpercent this year, and nearly 50 percent in 2013, are insufficient to meet therngrowing housing demand.” </p<prnrnrnrnrnrnrnrnrnrnrn

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