Pending Home Sales Index Increases in March

by Chicago Agent

Pending home sales rose from February to March, a surefire sign of future sales activity.

The Pending Home Sales Index, a leading measure of future home sales activity from NAR, increased in March, contributing further to the new housing recovery.

The index, which is based on contract signings, increased from 97.4 in February to 101.4 in March, a 4.1 percent increase that brings the index to its highest level since April 2010. Even more pronounced were yearly gains, which were 12.8 percent above the 89.9 of March 2011.

Lawrence Yun, NAR’s chief economist, said the data, which was far above analyst projections, confirms recent expectations for 2012 – that it is a year of recovery for housing.

“First quarter sales closings were the highest first quarter sales in five years,” he said. “The latest contract signing activity suggests the second quarter will be equally good.”

“The housing market has clearly turned the corner,” he continued. “Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”

Regionally, the index in the Midwest declined 0.9 percent to 93.3, but it is still 16.9 percent higher than a year ago. In the South, the index rose 5.9 percent to an index of 114.1 in March, which is 10.6 percent above March 2011.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales, which are often represented in NAR’s existing-home sale data two months or so after pending. An index of 100 is equal to the average level of contract activity during 2001, which was the first year of the index and is used as its base model.

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