By Peter Ricci
Just a day after the best new single-family home sales data in years, the National Association of Realtors is reporting another strong month for the Pending Home Sales Index, which rose 14.5 percent from September.
From August to September, the index’s increases were a bit more modest, increasing just 0.3 percent from 99.2 to 99.5.
Pending Home Sales Index – Consistent Growth
September was just the latest month of positive numbers for the Pending Home Sales Index, which has been growing steadily through 2011 and 2012:
- For 17 consecutive months now, the Pending Home Sales Index has risen on a year-over-year basis, and NAR credits that consistent growth with the strong existing-home sales numbers of 2012.
- In addition, all the housing regions showed strong growth for their Pending Home Sales Index: in the Northeast, sales were up 26.1 percent from September 2011, and by the same measures, sales were up 19.3 percent in the Midwest and 17.6 percent in the South; only in the West, where housing inventory is constrained, did the index not post strong yearly returns.
What Do Pending Home Sales Suggest About the Future?
Lawrence Yun, the chief economist of NAR, said that even with the minor monthly increase, the new Pending Home Sales Index does suggest a positive future for housing.
“Home contract activity remains at an elevated level in contrast with recent years, but currently appears to be bouncing around in a narrow range,” he said. “This means only minor movement is likely in near-term existing-home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013.”
Also, because pending sales look at contract signings and not completed transactions, they are an effective predictor for future existing-home sales data. Based on the latest Pending Home Sales Index, NAR is anticipating 4.6 million total existing-home sales closings in 2012, which would be a 9 percent increase from 2011, and an additional 9 percent increase in 2013 to 5.1 million sales.