Pending home sales increased in March and are well above a year ago,
another signal the housing market is recovering, according to the
National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on
contract signings, rose 4.1 percent to 101.4 in March from an upwardly
revised 97.4 in February and is 12.8 percent above March 2011 when it
was 89.9. The data reflects contracts but not closings.
The index is now at the highest level since April 2010 when it reached 111.3.
Lawrence Yun, NAR chief economist, said 2012 is expected to be a year of
recovery for housing. "First quarter sales closings were the highest
first quarter sales in five years. The latest contract signing activity
suggests the second quarter will be equally good," he says.
"The housing market has clearly turned the corner. Rising sales are
bringing down inventory and creating much more balanced conditions
around the county, which means home prices will be rising in more areas
as the year progresses," Yun says.
The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is
21.1 percent above March 2011. In the Midwest the index declined 0.9
percent to 93.3 but is 16.9 percent higher than a year ago. Pending home
sales in the South rose 5.9 percent to an index of 114.1 in March and
are 10.6 percent above March 2011. In the West the index increased 8.7
percent in March to 108.0 and is 9.0 percent above a year ago.
The National Association of REALTORS®, "The Voice for Real Estate," is
America's largest trade association, representing 1 million members
involved in all aspects of the residential and commercial real estate
*The Pending Home Sales 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, though the sale usually is finalized within one or two months of
The index is based on a large national sample, typically representing
about 20 percent of transactions for existing-home sales. In developing
the model for the index, it was demonstrated that the level of monthly
sales-contract activity parallels the level of closed existing-home
sales in the following two months.
An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined as well as the
first of five consecutive record years for existing-home sales; it
coincides with a level that is historically healthy.