Pending Sales Deliver First Increase in Nine Months

Contracts for home purchases ended a dismalrnnine-month downturn in March marked by the first improvement in the PendingrnHome Sales Index (PSHSI) published by the National Association of Realtors®rn(NAR) since mid-summer.  The Index endedrnits long drought, rising from 94.2 in February to 97.3 in March, a 3.4 percentrnimprovement.  The March PHSI was stillrn7.9 percent below one year earlier when it stood at 105.7.  NAR’s index is a forward-looking indicatorrnbased on contract signings rather than actual sales.  Contracts are usually finalized as salesrnwithin about 60 days of contract signings.</p

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Home sales are expected to trend up overrnthe course of the current year and into the next but with 2014’s slow start NARrnprojects that sales this year will fall short of those in 2013.  The Association is projecting a total of 4.9rnmillion home sales in 2014 compared to nearly 5.1 million in 2013.  </p

Lawrence Yun, NAR chief economist called the Marchrngain inevitable.  “After a dismal winter,rnmore buyers got an opportunity to look at homes last month and are beginning tornmake contract offers,” he said. “Sales activity is expected to steadily pick uprnas more inventory reaches the market, and from ongoing job creation in therneconomy.”</p

Despite thernlower home sales in 2014, NAR is projecting that inventory shortages willrncontinue in much of the country.  Thisrnshould continue to drive home prices higher and the median existing price isrnprojected to grow between 6 and 7 percent this year. </p

The PHSI inrnthe Northeast increased 1.4 percent to 78.8 in March, but is 5.9 percent belowrna year ago. In the Midwest the index slipped 0.8 percent to 94.5 in March, andrnis 10.1 percent below March 2013. Pending home sales in the South rose 5.6rnpercent to an index of 112.7 in March, but are 5.3 percent below a year ago.rnThe index in the West increased 5.7 percent in March to 91.0, but is 11.1rnpercent below March 2013.</p

The PHSI is tiedrnto an index of 100 which is equal to the average level of contract activityrnduring 2001, the first year to be examined. By coincidence the volume ofrnexisting-home sales in 2001 fell within the range of 5.0 to 5.5 million whichrnis considered normal for the current U.S. population.

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