Daily News and Information for the Professional Real Estate Agent
Pending Home Sales Index Rises, But Still Off From Prior Year
Thursday, February 01, 2007
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WASHINGTON, D.C. - Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the National Association of Realtors®.
The Pending Home Sales Index, based on contracts signed in December, rose 4.9 percent to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4 percent lower than December 2005.
The monthly gain was the biggest increase since March 2004 when the index rose 6.9 percent. A steady narrowing from year-ago readings has been observed since last July when the level of unsold housing inventory peaked at an all-time high.
David Lereah, NAR’s chief economist, said a moderate rise in existing-home contracts is a welcome relief for the real estate markets. “Some of the monthly gain may be weather related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out,” he said. “I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth best year on record.”
The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.
The upturn was broad based, with all regions showing an increase. The PHSI in the Northeast jumped 8.1 percent in December to 89.9 but was 4.8 percent below a year ago. The index in the West rose 5.3 percent to 112.2 but was 4.9 percent below December 2005. The index in the South increased 4.3 percent to 129.8 but was 4.2 percent lower than a year earlier. In the Midwest, the index was up 3.2 percent in December to 103.2 but was 4.3 percent below December 2005.
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Gradual Rise Projected for Home Sales After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, while new-home sales should turnaround by summer, according to the latest forecast by the National Association of Realtors.
Existing-Home Sales Ease, Supplies Tighten Existing-home sales eased but prices stabilized as inventories tightened in December, while 2006 was the third-highest sales year on record. Total existing-home sales - including single-family, townhomes, condominiums and co-ops - eased 0.8 percent to a seasonally adjusted annual rate of 6.22 million units.
New Home Sales Up 4.8% Last Month Housing demand showed further signs of stabilization heading into 2007, as sales of new single-family homes rose 4.8 percent to a seasonally adjusted annual rate of 1.12 million units in December, according to figures released by the U.S. Commerce Department.
Nearly Half of Consumers Say Housing Price Collapse Likely According to the latest Experian-Gallup Personal Credit Index survey, nearly half of all consumers say they think a housing bubble and collapse of housing prices is very likely or somewhat likely in their local residential real-estate market within the next three years. This is up from the 37 percent of Americans who felt this way in May 2005.
NAR: Existing-Home Sales To Improve In an upbeat report released by the National Association of Realtors, the association is predicting that existing-home sales, after reaching the third highest total on record, 6.48 million in 2006, are forecast at 6.44 million in 2007.
