By Peter Ricci
The Pending Home Sales Index, a forward-looking measure of real estate activity from the National Association of Realtors (NAR) that tracks contract signings, rose 13.2 percent year-over-year in October, hitting its highest mark since March 2007 and marking the 18th straight month of yearly increases for the index.
In addition, the Pending Home Sales Index increased 5.2 percent from September to October, as more and more buyers capitalized on favorable buying conditions.
Lawrence Yun – Job Market/Consumer Confidence Driving Housing
Lawrence Yun, the chief economist for NAR, said that a number of positive developments in the greater economy have contributed to greater homebuyer activity in housing.
“We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation, and rising consumer confidence about homebuying now that home prices have clearly turned positive,” Yun said.
On a regional basis, sales were particularly strong in the Midwest and the South, where the Pending Home Sales Index rose 15.6 and 5.5 percent, respectively; in addition, the index in those regions is now 20.0 and 17.4 percent higher than where it was a year ago.
Pending Home Sales Index – Sign of Strong Future Activity
Because the Pending Home Sales Index tracks contract signings, its data will not be immediately reflected in NAR’s existing-home sales data; normally, pending sales for a given month start appearing as closed transactions in 45 to 60 days, so we can probably expect October’s batch of pending sales to show up in November and December’s data.
On his Calculated Risk blog, though, Bill McBride did point out an interesting nuance to the data: “[B]ecause of the increase in short sales that take longer to close, some of these contract signings are probably for next year.”
So, it looks like January and February could produce some interest data on the existing-home sales front! Stay tuned.