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Pending Home Sales Weaker Again, but May be Stabilizing

by devteam March 27th, 2014 | Share

The National Association of Realtors®rn(NAR) Pending Home Sales Index (PHSI) for February added more confirmation of arnslowing home housing market.  The PHSI,rnreleased this morning, showed an eighth straight month of declining contractrnsignings. </p

PHSI is a forward-looking indicatorrnwhich tends to predict home sales over the ensuing 30 to 60 days.  The Index was down 0.8 percent in February torn93.9 from a downwardly revised 94.7 in January. rnJanuary had originally been estimated at 95.0.  The February level is 10.5 percent belowrnwhere the index was in February 2013 and is the lowest since October 2011 whenrnit was 92.2. </p

</p

However LawrencernYun, NAR chief economist, was optimistic about the import of the pending salesrndata.  He said the recent slowdown inrnhome sales may be behind us, while home prices continue to rise. “Contractrnsignings for the past three months have been little changed, implying thernmarket appears to be stabilizing,” he said. “Moreover, buyer trafficrninformation from our monthly Realtor® survey shows a modestrnturnaround, and some weather delayed transactions should close in the spring.”</p

All regions</bare below February 2013 levels but there were modest increases in the Midwestrnand West.  The Index in the Northeastrndeclined 2.4 percent to 77.1 in February, and is 7.4 percent below a year ago.  The Midwest index rose 2.8 percent to 95.3,rnremaining 8.5 percent below a year earlier. rnPending home sales in the South fell 4.0 percent from January to anrnindex of 106.3 and are 9.3 percent below a year ago. The index in the Westrnincreased 2.3 percent in February to 86.1, but is 16.5 percent below Februaryrn2013.</p

Totalrnexisting-home sales are forecast at 5.0 million this year, just below thernnearly 5.1 million in 2013. Housing starts are projected to rise almost 19rnpercent in 2014, and reach about 1.1 million, closer to the underlying demandrnof 1.5 million. </p

NAR said therngain in new home construction will reduce some of the pressure on home prices,rnwith the national median existing-home price expected to rise in the range ofrn5.5 to 6 percent this year, compared with an 11.5 percent jump in 2013.</p

The PendingrnHome Sales Index is based on a large national sample, typically representingrnabout 20 percent of transactions for existing-home sales. In developing thernmodel for the index, it was demonstrated that the level of monthlyrnsales-contract activity parallels the level of closed existing-home sales inrnthe following two months.  An index ofrn100 is equal to the average level of contract activity during 2001, which wasrnthe first year to be examined. By coincidence, the volume of existing-homernsales in 2001 fell within the range of 5.0 to 5.5 million, which is consideredrnnormal for the current U.S. population.

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About the Author

devteam

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

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