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Pending Home Sales Highest Since 2010 Tax Credit Expiration
The National Association of Realtors® (NAR) Pending Home Sales Index
reached the highest level seen in two and a half years in November after
posting its third consecutive monthly increase.
The previous recent high was in April 2010 when buyers were rushing to qualify
for the homebuyers' tax credit.
The PHSI rose to 106.4 in November, a 1.7 percent increase over the October
number which was revised down slightly to 104.6 from the 104.8 originally
reported. The November index was 9.8
percent above the index of 96.9 in November 2011.
The PHSI is a forward looking indicator of home sales based on contract
signings. Home sales are typically completed
within one to two months of contract signings.
NAR chief economist, said home sales are on a sustained uptrend. "Even with market frictions related to the
mortgage process, home contract activity continues to improve. Home sales are recovering now based solely on
fundamental demand and favorable affordability conditions."
NAR's press release noted that
pending home sales have increased over the previous year's level for 19
consecutive months. "The upward
momentum means existing-home sales should rise 8 to 9 percent in 2013 to
approximately 5.1 million, following a 10 percent gain expected for all of
2012. The median existing-home price is
projected to rise just over 4 percent in 2013, after rising more than 7 percent
On a regional basis the Index
rose 5.2 percent in the Northeast to 83.3 and is 15.2 percent above a year
ago. In the Midwest the index edged up
0.1 percent to 103.8 in November and is 15.2 percent above November 2011. Pending home sales in the South were unchanged
at an index of 117.2 in November and are 13.9 percent higher than a year ago. In the West the index rose 4.2 percent in
November to 110.1, but is 3.2 percent below November 2011 with inventory
constraints limiting sales.
The Pending Home Sale Index is
based on a large national sample, typically representing about 20 percent of
transactions for existing-home sales. An index of 100 is equal to the average
level of contract activity during 2001, which was the first year to be
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