Pending Sales Index Ekes out Marginal Gain

The index measuring pending home sales held on to its winningrnstreak in July, but its grip slipped a bit. rnThe National Association of Realtors® (NAR) said today that its Pending Home Sales Indexrn(PHSI) eked out a marginal 0.5 percent increase, making the month the sixth outrnof seven when contract signings gained compared to the previous month.  </p

The PHSI registered 110.9 in July, the third highest readingrnthis year, lagging only April and May. rnThe June index as an upwardly revised 110.4.  The July level was 7.4 percent higher than arnyear earlier and the index has increased year over year for 11 consecutive months.</p

The PHSI is a forward looking indicator based on contractrnsignings for home purchases.  Pendingrnsales typically turn into closed transactions in less than 60 days.</p

Lawrence Yun, NARrnchief economist, says the housing market began the second half of 2015 on arnpositive note, with pending sales slightly rising in July. “Led by a solid gainrnin the Northeast, contract activity in most of the country held steady lastrnmonth, which bodes well for existing-sales to maintain their recent elevatedrnpace to close out the summer,” he said. “While demand and sales continue to bernstronger than earlier this year, Realtors^{®</suphave reported since the spring that available listings in affordable pricernranges remain elusive for some buyers trying to reach the market andrnare likely holding back sales from being more robust. ” </p}

Yun said<binventory shortages are likely to continue into the fall but despite thisrndamper he expects the national median existing-home price to increase 6.3rnpercent in 2015 to $221,400 and that total existing-home sales will rise 7.1rnpercent to around 5.29 million, about 25 percent below the prior peak set inrn2005 (7.08 million).</p

“In light of thernrecent volatility in the stock market, it’s possible some prospective buyersrnmay err on the side of caution and delay decisions, while others may view realrnestate as a more stable asset in the current environment,” Yun continued.  “Overall, the prospects for ongoing strengthrnin the housing market remain intact for now. The U.S. economy is growing -rnalbeit at a modest pace – and the labor market continues to add jobs.  Uncertainty in the equity markets – even ifrnthe Fed raises short-term rates in September – could stabilize long-termrnmortgage rates and preserve affordability for buyers.” </p

The PHSI in thernNortheast increased 4.0 percent to 98.8 in July, and is now 12.1 percent aboverna year ago. In the Midwest the index remained unchanged at 107.8 in July, 5.7rnpercent above July 2014. 

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