Pending Home Sales Index Holds at High Level
May 2, 2005
WASHINGTON – The Pending Home Sales Index, a leading indicator for the housing market, is essentially flat after a healthy rise during the previous month, according to the National Association of Realtors®.
The Pending Home Sales Index,* based on data collected for March, stands at 122.8, which is 0.3 percent below February but 1.7 percent above March 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 the February and March indices bode well for home sales in April and May. “Considering we’ve set records for home sales in each of the last four years, the level of contract activity is exceptionally strong,” he said. “In fact, the March index is the sixth highest monthly reading we’ve ever had for pending home sales.” The report on April existing-home sales will be released May 24.
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 Northeast rose 5.8 percent to 114.7 in March, but was 4.1 percent below March 2004. In the South, the index increased 1.0 percent to 128.9 and was 5.3 percent higher than a year ago. The index in the West edged up 0.6 percent in March to 129.1 and was 10.5 percent above March 2004. In the Midwest, the index fell 6.1 percent from a surge in February to 113.7 in March, and was 7.5 percent below a year ago.
Source: The National Association of Realtors