NAR's Pending Home Sales Index rose by 7.3 percent in November to its highest level in 19 months.
The National Association of Realtors’ (NAR) Pending Home Sales Index, a measure of housing contracts for pending sales, rose 7.3 percent in November to its highest level in 19 months, according to a new press release from the association.
Increasing from 93.3 in October to 100.1 in November, the index is currently at its highest level since April 2010, when the homebuyer tax credit pushed it to 111.5. Additionally, the index is also 5.9 percent higher from November 2010.
Lawrence Yun, NAR’s chief economist, said delayed transactions may have inspired the gains.
“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” Yun said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”
Notable causes for contract failures have included low appraisals and declined mortgage applications.
Yun also said that positive pending sales spell further gains for existing-home sales.
“November is doing reasonably well in comparison with the past year,” Yun said. “The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead.”
NAR was also quick to point out that its recent revisions to existing-home sales data did not affect pending home sales, considering the latter index uses a different methodology for retrieving its data set.
Regionally, the Midwest faired reasonably well in the latest index, increasing 3.3 percent to 91.6 in November, though the region is 9.5 percent above a year ago.
Also, HousingWire reported that the new NAR data was particularly helpful to U.S. homebuilder shares. Shares for PulteGroup, D.R. Horton, KB Home, Beazer Homes and Toll Brothers all closed with higher prices at the end of tradig on Thursday, when the data was initially released.
The healthy day capped off an extremely positive fourth quarter for some of the builders, with shares at Pulte up by 52.4 percent, Toll Brothers up 38.7 percent, Beazer up by 56.1 percent and D.R. Horton up by 35 percent.