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Pending home sales, a leading indicator for the housing sector, slowed
for the third consecutive month and demonstrates that a market transition
is firmly in place, according to the National Association of Realtors®.
The Pending Home Sales Index, based on contracts signed in November,
slipped 2.5% to a reading of 120.6 from 123.7 in October, and is 2.5%
lower than November 2004.
The index is derived from pending sales of existing homes. A sale is
listed as pending when the contract has been signed but the transaction
has not closed; pending home sales typically are finalized within one or
two months of signing.
David Lereah, NAR’s chief economist, said the index remains at a high
level. “Although pending home sales are trending down from a record in
August, the index remains well above a mark that is considered to be
historically strong,” he said. An index of 100 is equal to the average
level of contract activity during 2001, the first year to be examined, and
was the first of five consecutive record years for existing-home sales.
“We are clearly experiencing a market transition, moving from a
prolonged boom to a more balanced period of sustainable sales,” Lereah
said. “In other words, home sales have been peaking for the last five
years and we will land on a high plateau in 2006 – a market that will be
healthy for both buyers and sellers. Investment fundamentals for housing
remain solid, preserving generally favorable affordability conditions
while offering solid returns as well as a place to live.”
Regionally, the PHSI in the Midwest rose 3.4% in November to
116.0 but was 3.7% lower than November 2004. In the South, the index
declined 1.9% to 132.8 in November but was 1.8% above a year ago.
The index in the West fell 5.1% to 127.7 in November, and was 4.6% lower
than a year ago. The index in the Northeast was down 8.3% to a level of
93.3, and was 8.0% below November 2004.
Source: National Association Of Realtors
Jan 5 2006 |
