NAR: Pending Home Sales Index Rise

The Pending Home Sales Index, a new leading indicator for the housing market, shows home sales are firming, according to the National Association of Realtors (r).

The Pending Home Sales Index, (see note 1) based on data collected for February, stands at 123.2, which was 2.2 percent above January and 10.4 percent above February 2004. The index is based on pending sales of existing homes, including single-family and condo. A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.

David Lereah, NAR's chief economist, said sales are looking strong for March and April. "Although home sales eased in February, housing activity appears to be firming with a modest uptrend in the months ahead," he said. Data for March existing-home sales will be released April 25.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity. Regionally, the PHSI in the Midwest rose 6.7 percent to 121.1 in February and was 9.4 percent above a year earlier. In the South, the index of 127.6 increased 3.5 percent from January and was 10.5 percent higher than February 2004. The index in the Northeast improved by 2.4 percent in February to 108.4 and was 3.0 percent above a year ago. In the West, the index fell 4.0 percent to 129.9 in February, but was 16.8 percent above February 2004.

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(note 1) The Pending Home Sales Index is based on a large national sample, representing about 20 percent of transactions for existing- home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing- home sales in the following two months.

The regional data are not as robust as the national data and may be subject to meaningful revisions from time to time. NAR will expand the regional market coverage and eventually develop an index for state markets as the sample size grows.

The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at http://www.realtor.org. This and other news releases are posted in the Web site's "News Media" section in the NAR Media Center. Statistical data, charts and surveys also may be found in the NAR Media Center by clicking on Economic & Housing Statistics.

REALTOR(r) is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS(r) and subscribe to its strict Code of Ethics.