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Posts Tagged ‘Pending Home Sales’

Pending Home Sales Rises To 6-Month High

Tuesday, January 4th, 2011

pending home sales 201011 Pending Home Sales Rises To 6 Month HighThe housing market continues to expand, and surprise.

According to the National Association of REALTORS®, November’s Pending Home Sales Index gained 3 percent from October. A “pending home sale” is a home under contract but not yet closed.

The index is now at its highest point since April 2010′s federal tax credit contract expiration deadline.

If the tax credit really did “borrow” sales from the summer months, as has been theorized, housing has rebuilt its foundation.

We know this because the Pending Home Sales Index stands apart as a forward-looking report — its designed purpose as described in its methodology.

Because 80% of all homes under contract close within 60 days, and a statistically significant share of the rest close within months 3 and 4, the Pending Home Sales Index is an excellent predictor of future Existing Home Sales data.

This is in contrast to the New Home Sales data and Case-Shiller Index, as examples, which both describe the real estate market as it existed two months in the past. The Pending Home Sales Index reports on housing as it exists right now. We should expect January’s Existing Home Sales report, therefore, to show marked strength, consistent with a housing market recovery.

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Pending Home Sales Index Points To A Budding Seller’s Market

Tuesday, December 7th, 2010

pending home sales 201010 Pending Home Sales Index Points To A Budding Sellers MarketThe Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Salt Lake buyers into action.

A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program.

The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better.

On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard.

  • Northeast Region: +19.6%
  • Midwest Region : +27.3%
  • South Region : +7.1%
  • West Region : -0.4%

Home buyers should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong.

In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined.

The best time to buy a home this year may have already passed. The next best time may be right now.

Talk to your clients if they’re planning to buy a home in 2011. It may be smart to move up the time frame.

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As The Pending Home Sales Index Falls, Home Buyers See Dollar Signs

Wednesday, August 4th, 2010

pending home sales 201006 As The Pending Home Sales Index Falls, Home Buyers See Dollar SignsThe Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June.  The index remains at record-low levels.

A “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.

The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report.  This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors.

June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer in Salt Lake , the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.

Plus, there’s other positives in the market for today’s buyers:

  • Home supplies are up, which creates competition among sellers
  • Builder confidence is down, which leads to “free” upgrades and incentives
  • Mortgage rates are low, which increases cash flow and disposable income

All things equal, the current home buying conditions haven’t been this favorable in years.

The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.

If you’re planning to buy a home later this year, consider moving up your time frame.

It’s an excellent time to be a buyer.

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Pending Home Sales Drag In January, But Should Rebound For Spring

Friday, March 5th, 2010

pending home sales 201001 Pending Home Sales Drag In January, But Should Rebound For Spring

Fewer homes went under contract in January as the housing market continues to limp through the winter months.

According to the National Association of Realtors®, the Pending Home Sales Index fell to its lowest level in 3 quarters this January. By contrast, in October 2009, the index had touched a 3-year high.

The Pending Home Sales Index measures the number of homes that have gone under contract to sell, but have yet to close nationwide. It’s compiled using data from more than 100 regional listing services and 60-plus brokerages  — the sample set encompasses 20 percent of all home resales in a given month.

Economists have come to rely on the Pending Home Sales Index because of its high correlation to actual home sales. 80% of all home marked “pending” close within 60 days. Many of the rest close within 120.

Therefore, when we see Pending Home Sales show weakness like it did in January, we can infer that home resales will remain weak through the spring.

But will they really?

  1. Fewer sales should drag down home prices, bringing more buyers into the market
  2. Mortgage rates are still very low, but are poised to rise in just a few weeks
  3. The home buyer tax credit requires buyers to be in contract by April 30, 2010

In other words, there’s a confluence of factors that could lead to a rush of sales in Provo and around the country over the next two months, reversing the housing market’s recent momentum.

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