Tag Archives: PHSI

Eye on Housing: Pending Home Sales Increase Modestly

Pending Home Sales Increase Modestly

by Stephen Melman Eye on Housing 

The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 1.5% in March 2013 to 105.7 from a downwardly revised 104.1 in February. The March 2013 PHSI reported by the National Association of Realtors (NAR) was 7.0% higher than the same period a year ago.  NAR reported that pending home sales have been above their previous year levels for the past 23 months.

Pending Home Sales March 2013

The modest increase in the PHSI mirrored last week’s reported total1.5% increase in March new home sales. The March PHSI was consistent across the regions. The PHSI was flat in the Northeast and increased 0.3% in the Midwest, 2.7% in the South and 1.5% in the West. By contrast, March new home sales increased sharply from the previous month in the Northeast and South, but decreased in the Midwest and West. Year over year, the PHSI decreased 4.3% in the West, but increased 6.3%, 13.7% and 10.4% in the Northeast, Midwest and South respectively.

NAR attributed the modest PHSI increase to limited inventory, despite reporting a slight increase in the March inventory level. Rising prices will continue to induce more homeowners to place their homes on the market and broaden choices for potential home buyers. Rising prices might also dampen the enthusiasm of all-cash investors, and further ease the pressure on inventory.

If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what will likely happen to existing home sales when the contracts close in coming months. We anticipate that the April 2013 and May 2013 existing sales data will reflect today’s pending sales report, suggesting continued moderation in existing home sales as we move through the spring.

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CR: Pending Home Sales index declines in February

Pending Home Sales index declines in February

by Bill McBride on 3/27/2013  

From the NAR: Pending Home Sales Slip on Constrained Inventory

The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 0.4 percent to 104.8 in February from a downwardly revised 105.2 in January, but is 8.4 percent higher than February 2012 when it was 96.6. Contract activity has been above year-ago levels for the past 22 months; the data reflect contracts but not closings.

The PHSI in the Northeast declined 2.5 percent to 82.8 in February but is 6.8 percent above February 2012. In the Midwest the index rose 0.4 percent to 103.6 in February and is 13.2 percent higher than a year ago. Pending home sales in the South slipped 0.3 percent to an index of 118.8 in February but are 12.1 percent above February 2012. In the West the index increased 0.1 percent in February to 101.4 but is 0.8 percent below a year ago.

“The volume of home sales appears to be leveling off with the constrained inventory conditions, and the leveling of the index means little change is likely in the pace of sales over the next couple months,” [Lawrence Yun , NAR chief economist] said.

Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in March and April.

As I’ve noted several times, with limited inventory at the low end and fewer foreclosures, we might see flat or even declining existing home sales. The key is that the number of conventional sales is increasing while foreclosures and short sales decline – and that is a sign of an improving market, even if total sales decline.

Read more at http://www.calculatedriskblog.com/2013/03/pending-home-sales-index-declines-in.html#Apd3XLLlpo5A7UsQ.99

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CR: Pending Home Sales index declines in December

Pending Home Sales index declines in December

by Bill McBride on 1/28/2013  

From the NAR: Pending Home Sales Down in December but Remain on Uptrend

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 4.3 percent to 101.7 in December from 106.3 in November but is 6.9 percent higher than December 2011 when it was 95.1. The data reflect contracts but not closings.

Lawrence Yun , NAR chief economist, said there is an uneven uptrend. “The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis,” he said. “Buyer interest remains solid, as evidenced by a separate Realtor® survey which shows that buyer foot traffic is easily outpacing seller traffic.”

Yun said shortages of available inventory are limiting sales in some areas. “Supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first-time buyers have fewer options,” he said …

The PHSI in the Northeast fell 5.4 percent to 78.8 in December but is 8.4 percent higher than December 2011. In the Midwest the index rose 0.9 percent to 104.8 in December and is 14.4 percent above a year ago. Pending home sales in the South declined 4.5 percent to an index of 111.5 in December but are 10.1 percent higher December 2011. In the West the index fell 8.2 percent in December to 101.0 and is 5.3 percent below a year ago.

Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in January and February.

As I’ve noted several times, with limited inventory at the low end and fewer foreclosures, we might see flat or even declining existing home sales. The key for sales is that the number of conventional sales is increasing while foreclosure and short sales decline.

Read more at http://www.calculatedriskblog.com/2013/01/pending-home-sales-index-declines-in.html#2hx5u5QhL7xdcTtJ.99

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NAR: Pending Home Sales Index increases in October

NAR: Pending Home Sales Index increases in October

by Bill McBride on 11/29/2012 

From the NAR: Pending Home Sales Rise in October to Highest Level in Over Five Years

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 5.2 percent to 104.8 in October from an upwardly revised 99.6 in September and is 13.2 percent above October 2011 when it was 92.6. The data reflect contracts but not closings.

Outside of a few spikes during the tax credit period, pending home sales are at the highest level since March 2007 when the index also reached 104.8. On a year-over-year basis, pending home sales have risen for 18 consecutive months.

Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in November and December.  However, because of the increase in short sales that take longer to close, some of these contract signings are probably for next year.

Read more at http://www.calculatedriskblog.com/2012/11/nar-pending-home-sales-index-increases.html#MyHOLk14yjfCWjIX.99

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Pending Home Sales Trend Upward

Pending Home Sales Trend Upward

by Stephen Melman — Eye on Housing

The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 0.3% in September 2012 to 99.5, up from 99.2 in August. Moreover, the September 2012 PHSI was 14.5% higher than the same period a year ago. Year-over-year, the PHSI has increased for 17 straight months.

The National Association of Realtors (NAR) reported monthly increases in the September PHSI for the Northeast, South and West, but a 5.8% decrease in the Midwest. This decrease is consistent with the 37.3% monthly decrease in new home sales in the Midwest reported yesterday. NAR reported strong year over year PHSI increases in the Northeast, Midwest and South, but only a small increase of 0.8% in the West.

Pending home sales September 2012  If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what will likely happen to existing home sales when the contracts close in coming months. We anticipate that the October and November existing sales data will reflect today’s pending sales report, suggesting that existing home sales are likely to rise, but perhaps at a slower rate than in recent months.

Improved year-over-year existing home sales suggest a stronger demand for remodeling as well. Today’s PHSI release comes out on the same day that the NAHB Remodeling Market Index (RMI) reached 50, the highest level since the third quarter of 2005.

Additionally, there is some concern that some short sales are being accelerated into 2012 due to the looming expiration of the cancelled debt tax exclusion for principal residences. Unless Congress acts, at the end of the year, any mortgage debt forgiven as part of an existing home sale will become taxable income. This tax provision likely increased existing home sales in 2012.

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Lawler: On the relationship between pending home sales and closed sales

Lawler: On the relationship between pending home sales and closed sales

by Bill McBride on 8/30/2012  

Yesterday the National Association of Realtors reported that its “National” Pending Home Sales Index increased by 2.4% on a seasonally adjusted basis in July to its highest level since April 2010.

The NAR’s PHSI did not signal the “dip” in June/July closed existing home sales, for reasons that are difficult to discern. It’s not easy to figure out “fallout” rates from the PHSI for several reasons: first, the PHSI is an index number with 2001 “activity” equal to 100, making numerical comparisons to the NAR’s existing home sales estimate difficult, especially since there is a “discontinuity” in the NAR’s existing home sales methodology in 2007; and second, the NAR’s PHSI is based on a sample size not much more than half that used to estimate existing home sales. To really delve into the relationship between pending sales and closed sales, one needs to get local data—which unfortunately isn’t available to the public in that many places.

Closed and Pending Home SalesClick on graph for larger image.

CR Note: This graph from Tom Lawler shows Pending and Closed home sales since January 2008. For this graph, Tom Lawler set both series to 100 in 2008.

More from Lawler: For fun, however, I looked at pending sales vs. closed sales data reported by MRIS for the mid-Atlantic region. While I have limited historical data, that data suggests that (1) contract fallout over the past two and a half years is up considerably from earlier periods; and (2) that increased fallout coincided with a significant increase in the share of pending sales that were “contingent. Other MRIS data/analyses suggests that a rise in the share of pending contracts that are short-sales, which (1) take much longer time to close; and (2) which have very high contract fall-out rates, has significantly impacted the relationship between pending sales and closed sales.

MRIS Closed and Pending Home SalesHere is a chart showing closed home sales by MRIS for the mid-Atlantic region compared to lagged new pending contracts, using a weighting of 60% for the previous month and 40% for two months earlier.

This chart suggests that over the last two years the number of closed home sales has been significantly lower than one would have expected based on the past relationship between past new pending sales and closed sales. While not shown here, a more “sophisticated” look at leads and lags suggests that the reason is not simply delayed closings, but is mainly contract fallout.

CR Note: It appears short sales are distorting the relationship between pending and closed sales, and the “pending home sales” report should currently be taken with an extra grain of salt.

Read more at http://www.calculatedriskblog.com/2012/08/lawler-on-relationship-between-pending.html

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Pending Home Sales Increase

Pending Home Sales Increase

by Stephen Melman — Eye on Housing

The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 5.9 percent in May 2012, from 95.5 in April.  At this level, the PHSI equaled the level of March 2012, and reached the highest level since the expiration of the home buyer tax credit in April 2010. The May PHSI was 13.3 percent higher than in May 2011.

The National Association of Realtors (NAR) reported that the May PHSI was up in all regions from last month and last year. The monthly increases were 4.8 percent in the Northeast, 6.3 percent in the Midwest, 1.1 percent in the South and 14.5 percent in the West. The year over year increases were 19.8 percent in the Northeast, 22.1 percent in the Midwest, 11.9 percent in the South and 4.8 percent in the West.  These regional numbers roughly reflect the May new home sales report, which suggested housing demand strength for the Northeast but lackluster improvement in the West.

 

If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what is likely to happen with existing home sales when the contracts close in coming months. We anticipate that June and July existing sales that will be reported on July 19, 2012 and August 22, 2012, will reflect the strength of today’s pending sales report.

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