The Pending Home Sales Index (PHSI), a monthly measure of pending home sales activity from the National Association of Realtors (NAR), posted both monthly and yearly increases for January, evidence of continued gains in housing for the next two months.
According to the latest data from NAR, the PHSI rose 2.0 percent from 95.1 in December to 97.0 in January. The index is 8.0 percent year-over-year, when it was 89.8 in January 2011, and it the highest since April 2010, when the home buyer tax credit pushed the index to a post-bubble high of 111.3.
Lawrence Yun, NAR’s chief economist, said positive factors in the wider economy have aided housing.
“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun said.
Yun also emphasized the future returns of the PHSI and its possible relationship with inventories.
“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” Yun said. “With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”
Though Yun’s first comment cannot be denied – the contract signings measured by the PHSI yield sales in 45 to 60 days, usually – his statements on inventories do seem at odds with recent developments in the ever-expanding inventory saga. As we reported earlier, though inventories are indeed down, we may have entered a period where distressed sales represent the only meaningful sales activity in housing, and if those sales do not continue, prices may continue to fall, even as supply gradually declines.
Regionally, the Midwest saw the index decline by 3.8 percent to 88.1, though it was 10.8 percent higher than in January 2011.