WASHINGTON
(June 27, 2012) – Pending home sales bounced back in May, matching the
highest level in the past two years, and are well above year-ago levels,
according to the
National Association of Realtors®. Both monthly and annual gains were seen in every region.
The
Pending Home Sales Index,*
a forward-looking indicator based on contract signings, rose 5.9
percent to 101.1 in May from 95.5 in April and is 13.3 percent above May
2011 when it was 89.2. The data reflect contracts but not closings.
The index also reached 101.1 in March, which is the highest level
since April 2010 when buyers were rushing to beat the deadline for the
home buyer tax credit.
Lawrence Yun,
NAR chief economist, said longer term comparisons are more relevant.
“The housing market is clearly superior this year compared with the past
four years. The latest increase in home contract signings marks 13
consecutive months of year-over-year gains,” he said. “Actual closings
for existing-home sales have been notably higher since the beginning of
the year and we’re on track to see a 9 to 10 percent improvement in
total sales for 2012.”
The national median existing-home price is expected to rise 3.0 percent this year and another 5.7 percent in 2013.
The PHSI in the Northeast increased 4.8 percent to 82.9 in May and is
19.8 percent above May 2011. In the Midwest the index rose 6.3 percent
to 98.9 in May and is 22.1 percent higher than a year ago. Pending
home sales in the South increased 1.1 percent to an index of 106.9 in
May and are 11.9 percent above May 2011. In the West the index jumped
14.5 percent in May to 108.7 and is 4.8 percent stronger than a year
ago.
Low inventory could hold back some contract activity. “If credit
conditions returned to normal and if we had more inventory, especially
in the lower price ranges, more people would become successful buyers.
In an environment of historically favorable housing affordability
conditions, it’s frustrating to see some consumers thwarted in the
process,” Yun said.
Low inventory results partly from underwater homeowners who are
unwilling to list their homes, which would require a lengthy short sale
process, or additional cash to complete the transaction. NAR estimates
85 percent of homeowners have positive equity, with 15 percent in an
underwater situation.
“Low inventory can be cured by increasing new home construction,” Yun
said. He projects housing starts to rise by 26 percent this year and
another 50 percent in 2013.
“If housing starts do not rise in a meaningful way over the next two
years due to the difficulty in getting construction loans, and barring
an unexpected shift in the economy, the steady shedding of inventory
could lead to shortages where home prices could get bid up close to 10
percent in 2013,” Yun said.
The National Association of Realtors®, “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.
# # #
*The Pending Home Sales Index is a leading indicator for the housing
sector, based on pending sales of existing homes. A sale is listed as
pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months of
signing.
The index is based on a large national sample, typically 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 parallels the level of closed
existing-home sales in the following two months.
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.
NOTE: Existing-home sales for June will be reported July 19 and the
next Pending Home Sales Index will be on July 26; release times are
10:00 a.m. EDT.
Information about NAR is available at
www.realtor.org.
News releases are posted in the website’s “News and Commentary” tab.
Statistical data in this release, as well as other tables and surveys,
are posted in the “Research and Statistics” tab of
www.realtor.org.
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