The market is likely to stabilize in the months ahead, according to the NATIONAL ASSOCIATION OF REALTORS®’ forward-looking indicator on pending home sales.
The Pending Home Sales Index, based on contracts signed in June, was 5 percent higher from the downwardly revised May index of 97.5, but is still 8.6 percent below June 2006 when it stood at 112. Nevertheless, this 5 percent monthly gain is the largest in more than three years, since a 6.1 percent increase was recorded in March 2004.
Lawrence Yun, NAR senior economist, says it’s encouraging that the increase occurred in all four major regions of the United States. “However, it is too early to say if home sales have already passed bottom,” he says. “Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand.”
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 but the transaction has not closed.
What Happened Regionally
Here’s a breakdown of what the PHSI showed across the country:
- West: the PHSI increased 8.6 percent in June to 103.6, but was 5.5 percent below a year ago.
- Northeast: the index rose 3.1 percent from May to 96, which is 2.4 percent lower than June 2006.
- South: the index increased 4.7 percent in June to 111.6, but was 12.7 percent below a year ago.
- Midwest: the PHSI rose 3.5 percent in June to 92.5, which is 8.2 percent lower than June 2006.
— REALTOR® Magazine Online