Pending Home Sales
After a strong run to close out 2010, the market for home resales softened a bit in January.
On a seasonally-adjusted basis, the Pending Home Sales Index dropped 3 percent last month, and December’s figures were revised downward for a loss, too, according to the National Association of REALTORS®.
A “pending home sale” is defined as a home under contract to sell, but not yet closed.
The forward-looking index is now at a 3-month low on a national level, but still well ahead of its rolling 6-month average.
Unfortunately, national data isn’t overly helpful for buyers and sellers of real estate. The National Association of REALTORS® knows this, of course, and makes an effort to get more granular, supplementing the Pending Home Sales Index report with a region-by-region breakdown.
Between December and January, only the South Region increased in sales volume. The Midwest led the losers:
- Northeast Region: -2.4%
- Midwest Region : -7.3%
- South Region : +1.4%
- West Region : -5.2%
Even still, however, regional data remains too broad to be practical. The South Region, for example, is comprised of multiple states with thousands of cities and town. The housing market dynamics of a specific neighborhood in a specific regional city will differ from that of another neighborhood in another regional city.
Real estate data must be local to be relevant.
Overall, then, what may be most telling from January’s Pending Home Sales Index is how weather can influence results.
Most of the country faced drastic weather conditions in January, ranging from raging snowstorms to bitter cold. Events like that tend to put a damper on home sales, a contributing factor in why the number of new contracts fell.
Another reason is rising mortgage rates. Conforming and FHA rates rose week-by-week in January, robbing home buyers of 10% of their purchasing power. This, too, can slow down purchase activity as buyers adjust their expectations.
Looking forward, we should expect the Pending Home Sales Index to resume rising. Inclement weather doesn’t kill demand; it just delays it. And mortgage rates have settled somewhat. These two factors should help release pent-up demand just as the Spring Homebuying Season gets underway.
As more buyers enter the market, negotiation leverage will shift to home sellers, pressuring Chesterfield home prices higher. The lowest prices of the year — and the cheapest financing — could be what you see today.
Another day, another strong report for housing.
The Pending Home Sales Index climbed 2 percent in December, according to the National Association of REALTORS®. A “pending home sale” is an existing home under contract to sell, but not yet closed.
Pending Home Sales are up for the fifth time in 6 months. The December reading is now its highest since the federal home buyer tax credit’s April 2010 contract deadline, and the figure is well north of the Pending Home Sales Index 3-year average.
Coupling this data with December’s strong Existing Homes Sales report (+12%) and its strong New Home Sales report (+17%), it’s clear that the housing market has past its trough and is in Recovery Mode.
Even consumer confidence is at an 8-month high.
On a regional basis, December’s Pending Home Sales Index varied as compared against November. The South region led the way, and the West region lagged.
- Northeast Region: +1.8%
- Midwest Region : +8.0%
- South Region : +11.5%
- West Region : -13.2%
Home buyers in areas such as The Highlands would do well to study last month’s Pending Home Sales Index. It offers clues of what to expect during the spring buying season. For example, according to the National Association of REALTORS®, 80 percent of homes under contract close within 60 days.
Therefore, we can look at the December Pending Home Sales Index and project, with a high level of confidence, that home sales will be higher throughout February and March on a units-basis.
Furthermore, because the Existing Home Sales and New Home Sales reports show that housing stock is falling nationwide, spring buyers in Chester will notice find more competition for the available housing stock. As the Supply-and-Demand curve shifts towards sellers, home prices rise.
In other words, there’s no rush to buy a home, but as the year progresses, home prices are expected to rise, as are mortgage rates. This one-two combination will impact home affordability negatively. And the higher that mortgage rates go, the worse the damage.
Your home-buying dollar won’t go as far in 2011′s second half as it will go right now. If you have plans to buy a home in 2011, consider moving up your time-frame.
The housing market continues to expand, and surprise.
According to the National Association of REALTORS®, November’s Pending Home Sales Index gained 3 percent from October. A “pending home sale” is a home under contract but not yet closed.
The index is now at its highest point since April 2010′s federal tax credit contract expiration deadline.
If the tax credit really did “borrow” sales from the summer months, as has been theorized, housing has rebuilt its foundation.
We know this because, of all the housing data available to Chesterfield homeowners and home buyers, the Pending Home Sales Index stands apart as a forward-looking report — its designed purpose as described in its methodology.
Because 80% of all homes under contract close within 60 days, and a statistically significant share of the rest close within months 3 and 4, the Pending Home Sales Index is an excellent predictor of future Existing Home Sales data.
This is in contrast to the New Home Sales data and Case-Shiller Index, as examples, which both describe the real estate market as it existed two months in the past. The Pending Home Sales Index reports on housing as it exists right now. We should expect January’s Existing Home Sales report, therefore, to show marked strength, consistent with a housing market recovery.
The downside of the Pending Home Sales Index is that it’s a national report and real estate is not sold nationally — it’s sold locally. To get a feel for your home market and how it’s faring, talk to a licensed real estate agent with access to local home sale data.
If pending sales data is available, so much the better. Forward-looking figures can be more helpful than data that’s already old.
The Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Chesterfield buyers into action.
A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program.
The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better.
On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard.
- Northeast Region: +19.6%
- Midwest Region : +27.3%
- South Region : +7.1%
- West Region : -0.4%
Home buyers looking in areas such as Meadowville Landing should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong.
In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined.
The best time to buy a home this year may have already passed. The next best time may be right now.
Talk to your real estate agent if you’re planning to buy a home in 2011. It may be smart to move up your time frame.
After 3 straight months of improvement, the Pending Home Sales Index slid lower in September. As compared to August, September’s reading fell 2 percent.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is drawn from a combination of local real estate associations and national brokers, and represents 20 percent of all purchase transactions in a given month.
Because of the large sample set, and because 80 percent of homes under contract close within 60 days, the Pending Home Sales Index is a terrific future indicator for the housing market. A high correlation exists between the Pending Home Sales Index and the NAR’s monthly Existing Home Sales report issued two months hence.
Expect home sales to idle into the New Year, therefore.
For home buyers in Fort Lee , this is good news. Over the last two months, housing markets have overwhelmingly favored home sellers.
Consider than, since June, the volume of both new home sales and existing home sales has increased, causing the available home inventory to fall by months. Meanwhile, helped by low interest rates, demand from buyers has remained relatively stable.
As with everything in economics, falling supply with constant demand leads to higher prices.
Therefore, the Pending Home Sales Index’s fading September figures suggest a more balanced supply-and-demand curve in the months ahead, a move that should suppress rising home prices and shift negotiation leverage back to the buy-side.
So long as mortgage rates remain rock bottom, the autumn season is looking like a terrific time to buy.
The news is not as bad as it might appear at face value. I knew this would happen because when the numbers come out they are compared with the same month of last year. Last year, August through October, we had an anomaly with the tax incentive program in play. Something which we do not have this year. The numbers for our area (CVRMLS) for September 2010.
Pending Sales & Sales Success
In this market segment, Pending Sales for September are down by 13.72% to 1,038 versus September of last year at 1,203 that went under contract. With 2,808 newly listed homes this month and 1,038 under contract, the sales success index of 36.97% for September decreased 5.70% versus last year’s index of 39.20% in 2009.
According to the September 2010 statistics, this market area has experienced some downward momentum with the decline of average prices at closing. Prices dipped 1.29% to $211,307 versus the previous year September at $214,066. This is a difference in price of $2,758.
New Listings & Months Supply of Inventory
New Listing in this area for the month of September yielded 2,808 available resale dwellings. This was a decline of 8.50% or 261 units in comparison to September 2009. The total housing inventory at the end of September dipped by 0.60% to 13,783 existing homes available for sale. At an average of 1,075 closed sales per month over the last 12 months (October 2009 – September 2010), represented an unsold inventory index of 12.83 MSI for this market segment.
Consistent with calls of a housing rebound, the Pending Home Sales Index rose again in August. It marks the second straight month of improvement after May’s post-tax credit drop-off.
A “pending home” is an existing home under contract to sell, but not yet closed.
According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days. For this reason, the Pending Home Sales Index is an excellent forward-indicator for housing.
As a real-life illustration, after July’s 27% plunge to an 11-year low, Existing Home Sales recovered 8 percent in August. This was not a surprise, though, because July’s Pending Home Sales Index predicted it.
Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:
- Northeast : -2.9% from July
- Midwest : +2.1% from July
- South : +6.7% from July
- West : + 6.4% from July
That said, real estate markets aren’t “regional” — they’re local. Just as there are improving markets within the Northeast Region, there’s worsening markets in the West. And cities like Chester have their own market traits, too.
Overall, buyers are being drawn into housing by low mortgage rates, affordable homes, and ample supply. If the August Pending Home Sales Index is foreshadowing the fall housing market, home prices appear slated to rise.
Just one week after reports of Existing Home Sales and New Home Sales plunging, the housing market is signaling that auturm may fare better than did summer.
The number of homes under contract to sell rose 5 percent in July.
The data comes from the July Pending Home Sales Index, as published by the National Association of Realtors®. By definition, a “pending home sales” is a home that is sold, but not yet closed.
Historically, 80% of such homes close within 60 days which makes the Pending Home Sales Index an excellent, forward-looking indicator for the real estate market.
Indeed, the nationwide drop in home sales this summer was foreshadowed by the Pending Home Sales report. The index dropped 30 percent in May. Then, two months later in July, it was shown that Existing Home Sales volume dropped 29 percent.
That’s a strong correlation.
Now, to be fair, the July Pending Home Sales Index is still relatively low; the second-lowest on record and well below last year’s numbers. But, the tick higher last month shows how housing may be stronger than than what the headlines report.
It appears that buyers in Fort Lee took advantage of rising inventory, cheap financing, and stagnant prices, and pushed the market forward. We should expect similarly promising numbers when September’s Existing Home Sales data is released.
The Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.
The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors.
June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer in Chester , the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.
Plus, there’s other positives in the market for today’s buyers:
- Home supplies are up, which creates competition among sellers
- Builder confidence is down, which leads to “free” upgrades and incentives
- Mortgage rates are low, which increases cash flow and disposable income
All things equal, the current home buying conditions haven’t been this favorable in years.
The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.
If you’re planning to buy a home later this year, consider moving up your time frame.
It’s an excellent time to be a buyer in Rivers Bend.
The Pending Home Sales Index plunged in May 2010, just one month after the expiration of the federal home buyer tax credit program.
The Pending Home Sales Index is now at a record-low level.
A “pending home sale” is an existing home under contract to sell, but not yet closed. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days.
Because of this timeline, we can expect the summer’s Existing Home Sales to be weak, too. With fewer homes going under contract, fewer homes can close.
On the surface, May’s Pending Home Sales Index looks like terrible news for housing. And, if you’re a seller, it just might be. But, if you’re a buyer, the story reads differently. Just consider the market conditions.
A broad look at the housing market shows:
- Home supplies are rising in most markets
- Home sales are falling in most markets
- Mortgage rates are at all-time lows
In other words, in most markets, more sellers are competing for fewer buyers, and the “winning” buyers are financing their homes at the lowest rates in history.
It’s an excellent time to be a home buyer in Chesterfield.