NAR Archives - Page 4 of 7 - George L. Duarte

Pending Home Sales Index 09-2012 The home resales is expected to finish the year with strength.

Last month, for the fifth straight month, the Pending Home Sales Index hovered near its benchmark value of 100, registering 99.5 in September.

he Pending Home Sales Index tracks homes under contract to sell, but not yet sold, and is published by the National Association of REALTORS®. The index is a relative one. It compares today’s housing market activity to the housing market activity of 2001 — the index’s first year of existence.

The Pending Home Sales Index has averaged 99.1 this year.

Among housing market indicators, the Pending Home Sales Index is unique. It doesn’t report on prior market activity as the Existing Home Sales and New Home Sales reports do. By contrast, the Pending Home Sales Index is a forward-looking indicator.

The real estate trade association tell us that 80% of U.S. homes under contract go to closing within 60 days, and many of the rest go within Months 3 and 4. In this way, the monthly Pending Home Sales Index can foreshadow to today’s Minneapolis home buyers and sellers what’s next for housing.

Based on September’s Pending Home Sales Index, then, we should expect to see closed home sales stay strong through November and December. That said, home sales are expected to vary by region.

Here is how the Pending Home Sales Index broke down by area last month as compared to one year ago on a seasonally-adjusted, annualized basis :

Northeast Region : +26.1% from September 2011
Midwest Region : +19.3% from September 2011
South Region : +17.6% from September 2011
West Region : +0.8% from September 2011

Often, the last few months of a year are considered to be a “slow” period for the housing market. Based on regional, annual Pending Home Sales Index improvements, though, 2012 may be different. The market looks poised to finish with momentum that may carry home prices higher into 2013.

For today’s home buyers, mortgage rates remain low and home prices have only started to climb.

Existing Home Supply drops to 5.9 months

As the third quarter closed, home resales showed considerable momentum nationwide.

The National Association of REALTORS® reports Existing Home Sales at 4.75 million units in September 2012 on a seasonally-adjusted, annualized basis, an 11 percent increase from one year ago.

An “existing home” is a home that’s been previously occupied; a resale.

The reading marks the second-highest tally of the year — second only to August 2012 when 4.83 million homes were sold on a seasonally-adjusted, annualized basis. The real estate trade association reports that there are now just 2.32 million previously-occupied homes for sale nationwide.

It’s the thinnest national home supply since March 2005 and, at today’s sales pace, all 2.32 million homes would sell in 5.9 months.

A 6.0-month home supply is thought to represent a market in balance. September’s home supply, therefore, suggests a market which favors sellers. Buyers in many U.S. markets may have noticed this shift. Multiple-offer situations are increasingly common and “right-priced” homes are selling quickly.

The median Time on Market is down 31 percent from last year to 70 days nationwide.

Meanwhile, for purchasers of foreclosures and short sales, September Existing Home Sales report included interesting data on the relative value of buying “distressed” property :

Foreclosures sold at an average discount of 21% to market value last month
Short sales sold at an average discount of 13% to market value last month

And, although distressed homes remain a large part of the U.S. housing market, their relative size is shrinking.

In September, foreclosures and short sales accounted for roughly 1 in 4 home sales. Earlier this year, that figure was 1 in 3.

For today’s Chicago home buyer, September’s Existing Home Sales report may be a “buy signal”. With home supplies down and demand for homes rising, home prices are poised to increase through the last three months of 2012 and into the start 2013.

Pending Home Sales Index Suggests Housing Momentum Into 2013

Home Supplies Drop To Multi-Year Low

Recent Articles