March 28, 2011 (Jeff Alan)
The National Association of Realtors (NAR) released its February Pending Home Sales Index (PHSI) which rose 2.1 percent from the previous month to 90.8, based on contracts signed in February, and is the first upward trend after two consecutive months of declines.
The index is still lagging 8.2 percent behind February 2010’s index which stood at 98.9. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
By region, the Northeast fell 10.9 percent to 65.5 in February and is 18.4 percent below a year ago and in the Midwest the index rose 4.0 percent in February to 81.1 but is 15.9 percent below February 2010. In the South the index increased 2.7 percent to an index of 100.3, but is 5.3 percent below a year ago, and in the West the index rose 7.0 percent to 105.6 and is 0.6 percent higher than February 2010.
Lawrence Yun, NAR chief economist, said the 10.9 percent monthly drop in the Northeast may have been due to unusually bad winter weather, which discourages home shopping activity.
Yun also pointed out that despite an uneven economic recovery, pending home sales had trended up very nicely since bottoming out last June and even with periodic monthly declines, contract activity is now 20 percent above the low point following the expiration of the home buyer tax credit.
Yun was also upbeat about the future of home sales by stating, “We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who’ve been on the sidelines.”
Tags: NAR, pending home sales, uneven economic recovery, home buyer tax credit, future home sales, job creation, affordability conditions