The National Association of Realtors®
(NAR) Pending Home Sales Index (PHSI) for February added more confirmation of a
slowing home housing market. The PHSI,
released this morning, showed an eighth straight month of declining contract
PHSI is a forward-looking indicator
which tends to predict home sales over the ensuing 30 to 60 days. The Index was down 0.8 percent in February to
93.9 from a downwardly revised 94.7 in January.
January had originally been estimated at 95.0. The February level is 10.5 percent below
where the index was in February 2013 and is the lowest since October 2011 when
it was 92.2.
Yun, NAR chief economist, was optimistic about the import of the pending sales
data. He said the recent slowdown in
home sales may be behind us, while home prices continue to rise. "Contract
signings for the past three months have been little changed, implying the
market appears to be stabilizing," he said. "Moreover, buyer traffic
information from our monthly Realtor® survey shows a modest
turnaround, and some weather delayed transactions should close in the spring."
are below February 2013 levels but there were modest increases in the Midwest
and West. The Index in the Northeast
declined 2.4 percent to 77.1 in February, and is 7.4 percent below a year ago. The Midwest index rose 2.8 percent to 95.3,
remaining 8.5 percent below a year earlier.
Pending home sales in the South fell 4.0 percent from January to an
index of 106.3 and are 9.3 percent below a year ago. The index in the West
increased 2.3 percent in February to 86.1, but is 16.5 percent below February
existing-home sales are forecast at 5.0 million this year, just below the
nearly 5.1 million in 2013. Housing starts are projected to rise almost 19
percent in 2014, and reach about 1.1 million, closer to the underlying demand
of 1.5 million.
NAR said the
gain in new home construction will reduce some of the pressure on home prices,
with the national median existing-home price expected to rise in the range of
5.5 to 6 percent this year, compared with an 11.5 percent jump in 2013.
Home Sales 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. By coincidence, the volume of existing-home
sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered
normal for the current U.S. population.