Pending Home Sales IndexThe National Association of REALTORS® (NAR) reports that the Pending Home Sales Index fell 4.3 percent in December as compared to the month prior. The index now reads 101.7.

The Pending Home Sales Index measures the number of U.S. homes that have gone “into contract”, but have not yet closed. The report is based on data collected from local real estate associations, and from national brokers.

Despite December’s drop, however, the annual rate at which contracts for a home purchase were drawn increased 6.9 percent from one year ago, and marked the 20th consecutive month of annual purchase contract gains.

NAR reports that 80% of homes under contract are closed with 60 days, with the majority of the remained homes “sold” within months 3 and 4.

Analysts believe that December’s Pending Home Sales Index drop is not a result of a weakening housing market. Rather, it’s a function of a falling national home supply; in particular, a shortage of homes in the West Region offered a prices under $100,000.

The national housing inventory is currently at an 11-year low. However, regionally, results varied :

  • Northwest : -5.4 percent from November; +8.4 percent from one year ago
  • Midwest : +0.9 percent from November; +14.4 percent from one year ago
  • South : -4.5 percent from November; +10.1 percent from one year ago
  • West: -8.2 percent from November; -5.3 percent from one year ago

Although December’s Pending Home Sales Index dropped as compared to November, the year-to-year growth of pending home sales suggests a broader improvement in the U.S. housing market. Furthermore, the index is a strong indicator of existing home sales, which means that this season’s home sales should outpace those from 2012.

The Pending Home Sales Index is bench-marked to 100, the value from 2001, which was the index’s first year of existence. 2001 was considered a strong year for the housing market so last month’s 101.7 is considered a positive measure for the housing market.

Analysts project a strong Spring market in San Jose and nationwide.

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Pending Home Sales IndexHome buyers continue to push the U.S. housing market forward.

In November, for the second straight month, the Pending Home Sales Index eclipsed its benchmark reading of 100, posting a value of 106.4.

The Pending Home Sales Index (PHSI) is published monthly by the National Association of REALTORS®. It tracks homes under contract to sell, but not sold. The PHSI is relative index, comparing current contract activity to the activity of 2001 — the first year for which “pending homes” were tallied for an index.

The Pending Home Sales Index has posted an average score of 100.2 from January 2012 through November 2012, the most recent month for which there’s data. This is a significant data point because it means that the 2012 housing market is performing better than the 2001 housing market; one which is widely considered a strong one for housing.

It’s also meaningful because it foreshadows a strong market for 2013. With an increasing number of homes under contract to sell, it can be assumed that “closed units” will increase in the future, too.

The National Association of REALTORS® says that 80% of U.S. homes under contract go to closing within 60 days, and that many of the remaining homes go to closing within days 61-120.

The monthly Pending Home Sales Index, therefore, can foreshadow to today’s Cambrian buyers and sellers what’s ahead for the housing market.

The Pending Home Sales Index is a forward-looking indicator.

Based on November Pending Home Sales Index, we should expect to the home resale market to remain strong, and to pick up strength, through the first quarter of 2013. Demand for homes is high, mortgage rates are low, and buyers are looking to get a good deal.

The first few months of the year are often thought to be “slow” for the housing market. This year, however, that may not be the situation. If you’re actively looking for homes in San Jose , the best prices may be the ones you get this winter.

Pending Home Sales IndexHomes were sold at a furious pace last month.

According the National Association of REALTORS® (NAR), the Pending Home Sales Index rose 5.2 percent in October, crossing the benchmark 100 reading, and moving to 104.8.

It’s a 5-point improvement from September’s revised figure and the highest reading April 2010 — the last month of that year’s federal home buyer tax credit.

October also marks the 18th consecutive month during which the index showed year-to-year gains.

As a housing market metric, the Pending Home Sales Index (PHSI) differs from most commonly-cited housing statistics because, instead of reporting on what’s already occurred, it details what’s likely to happen next.

The PHSI is a forward-looking indicator; a predictor of future sales. It’s based on signed real estate contracts for existing single-family homes, condominiums, and co-ops. Later, when the contract leads to a closing, the “pending” home sale is counted in NAR’s monthly Existing Home Sales report.

Historically, 80 percent of homes under contract, and thus counted in the Pending Home Sales Index, will go to settlement within a 2-month period, and a significant share of the rest will close within months 3 and 4. The PHSI is a predictor of Existing Home Sales.

Regionally, the Pending Home Sales Index varied in October 2012 :

  • Northeast Region : 79.2; +13 percent from October 2011
  • Midwest Region : 104.4; +20 percent from October 2011
  • South Region : 117.3; +17 percent from October 2011
  • West Region : 105.7; +1 percent from October 2011

A Pending Home Sales Index reading of 100 or higher denotes a “strong” housing market.

Of course, with rising home sales comes rising home values. 2012 has been characterized by strong buyer demand amid falling housing supplies. It’s one reason why the Case-Shiller Index and the FHFA’s Home Price Index are both showing an annual increase in home prices. Plus, with mortgage rates low as we head into December, the traditional “slow season” for housing has been anything but.

The housing market in San Jose is poised to end 2012 with strength. 2013 is expected to begin the same way.

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Pending Home Sales Index 09-2012The home resales is expected to finish the year with strength.

Last month, for the fifth straight month, the Pending Home Sales Index hovered near its benchmark value of 100, registering 99.5 in September.

he Pending Home Sales Index tracks homes under contract to sell, but not yet sold, and is published by the National Association of REALTORS®. The index is a relative one. It compares today’s housing market activity to the housing market activity of 2001 — the index’s first year of existence.

The Pending Home Sales Index has averaged 99.1 this year.

Among housing market indicators, the Pending Home Sales Index is unique. It doesn’t report on prior market activity as the Existing Home Sales and New Home Sales reports do. By contrast, the Pending Home Sales Index is a forward-looking indicator.

The real estate trade association tell us that 80% of U.S. homes under contract go to closing within 60 days, and many of the rest go within Months 3 and 4. In this way, the monthly Pending Home Sales Index can foreshadow to today’s San Jose home buyers and sellers what’s next for housing.

Based on September’s Pending Home Sales Index, then, we should expect to see closed home sales stay strong through November and December. That said, home sales are expected to vary by region.

Here is how the Pending Home Sales Index broke down by area last month as compared to one year ago on a seasonally-adjusted, annualized basis :

  • Northeast Region : +26.1% from September 2011
  • Midwest Region : +19.3% from September 2011
  • South Region : +17.6% from September 2011
  • West Region : +0.8% from September 2011

Often, the last few months of a year are considered to be a “slow” period for the housing market. Based on regional, annual Pending Home Sales Index improvements, though, 2012 may be different. The market looks poised to finish with momentum that may carry home prices higher into 2013.

For today’s home buyers, mortgage rates remain low and home prices have only started to climb.

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Pending Home Sales Index 2009-2012

Nationwide, homes continue to sell briskly.

According to the National Association of REALTORS®, the Pending Home Sales Index read 99.2 for August — the fourth straight month in which the index hovered near its benchmark value of 100.

A “pending home” is a home that is under contract to sell, but has not yet closed. The index measures with fair accuracy the future strength of the U.S. housing market.

For today’s San Jose home buyers, the August Pending Home Sales Index is relevant for several reasons.

First, the index remains near its highest point since April 2010, the last month of that year’s federal home buyer tax credit. This implies that the current housing market is performing nearly as well as the “stimulated” market of two years ago — except without the accompanying federal stimulus.

The housing market is standing on its own, in other words.

Second, the Pending Home Sales Index suggests that today’s housing market is among the strongest of the last decade. We can make this inference because the Pending Home Sales Index is a relative index, benchmarked to the value of “100” which represents the housing market as it behaved in 2001.

2001 was strong year in housing. With today’s Pending Home Sales Index remaining near 100, it tells us that 2012 is similarly strong.

And, third, the Pending Home Sales Index is relevant because it’s a forward-looking housing metric — one of the few that are regularly published. As compared to the Case-Shiller Index or Existing Home Sales report which both report on how housing fared in the past, the Pending Home Sales Index projects 30-60 days to the future.

Based on August data, therefore, we can expect for home sales volume to remain high as 2012 comes to a close.

If you’re currently shopping for a home, you’ve likely noticed a change in the market. Multiple-offer situations are more common and sellers are regaining negotiation leverage. The longer you wait to buy, therefore, the more you may pay for a home.

Read the complete Pending Home Sales Report on the NAR website

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Pending Home Sales Index

In July, the third time this year, the Pending Home Sales Index crossed its benchmark value of 100, moving to 101.7. 

A “pending home sale” is a home under contract to sell, but not yet sold. Data for the index is collected by the National Association of REALTORS® and published monthly.

The rise in July’s Pending Home Sales Index reading is important for two reasons — both of which highlight a U.S. housing market in recovery. Buyer and sellers in San Jose and across the country would do well to pay attention.

First, the Pending Home Sales Index is at its highest point since April 2010, the last month of that year’s federal home buyer tax credit.

From this, we can infer that the rate at which homes are selling in California and nationwide is approaching the same “stimulated” levels that the tax credit afforded two-plus years ago. The difference is that today there are no buyer tax incentives.

The Pending Home Sales Index readings have climbed steadily since the tax credit’s expiration, too :

  • July 2010 : 78.4 reading
  • July 2011 : 90.5 reading
  • July 2012 : 101.7 reading

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 when it was launched by the real estate trade group in 2001, when the PHSI reads higher than 100, it tells us that homes are going under contract at a faster pace than they did during the index’s first year.

2001 was a strong year for the U.S. housing market. 2012 is on path to be a stronger one.

80% of homes go to closing within two months of contract so, based on the July 2012 Pending Home Sales Index, we should expect for the Existing Home Sales report to rise through the rest of summer and into fall. Home supplies may drop and home prices may rise.

The housing market has expanded slowly and steadily dating to October 2011. Based on last month’s PHSI, that momentum will continue. 

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Pending Home Sales Index June 2012

Home sales appear headed for a mid-summer breather. 

One month after posting a multi-year high, the Pending Home Sales Index retreated to 99.3 in June — a strong reading in its own right.

A “pending home sale” is a home that is under contract to sell, but not yet sold. June’s value of 99.3 marks the 14th consecutive month during which the index showed year-to-year gains.

Last year in June, the index read 90.7.

For home buyers in San Jose and nationwide, the 14-month winning streak is one worth noting — specifically because the Pending Home Sales Index is different from the other housing market data that tends to make headlines.

Unlike the FHFA’s Home Price Index, for example; or the monthly New Home Sales data which both report on how housing performed in the past, the National Association of REALTORS®’ Pending Home Sales Index looks at how housing will perform in the future.

With high correlation, the Pending Home Sales Index predicts how Existing Home Sales will perform two months hence. This is because 80% of homes under contract convert to “closed sales” within 60 days of going into contract, and many of the rest convert within Months 3 and 4.

In addition, June’s near-100 reading is significant.

The Pending Home Sales Index is normalized to 100, a value which corresponds to the average home contract activity in 2001, the index’s first year of existence. 2001 was an historically-strong year for the housing market which means that June’s market action was also strong.

For today’s home buyers, the Pending Home Sales Index implies that the current market is somewhat “soft” as compared to May, a scenario which lends itself to buyer-friendly negotiations. Plus, with mortgage rates at all-time lows, home affordability has never been higher.

It’s an opportune time to buy a home in Cambrian. By next month, the market may look different.

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Existing Home Supply

Home resales slipped more than 5 percent last month, putting a damper recent housing market enthusiasm.

According to the National Association of REALTORS®, Existing Home Sales fell to 4.37 million units in June 2012 on a seasonally-adjusted, annualized basis. This is 250,000 fewer home sales per year as compared May’s figures which NAR has revised 2 percentage points higher.

The pace at which homes are selling has slowed, too. As compared to May, the Existing Home Supply rose 0.2 months. At the current pace of sales nationwide, the national home supply would now be exhausted in 6.6 months.

A home supply of 6.0 months is believed to mark a market in balance. There are currently 2.39 million homes for sale nationwide — the lowest total in 3 months and more than 24% below than the listed inventory at this point last year.

Other noteworthy statistics from the Existing Home Sales report include :

  • First-time buyers accounted for 32% of all purchasers in June, down from 34% in May
  • Real estate investors accounted for 19% of all purchasersin June, up from 17% in May
  • Cash buyers accounted for 29% of all purchasers in June, up from 28% in May

In addition, distressed sales as a percentage of all sales was unchanged in June as foreclosures sold for an average discount of 18 percent below market value. Short sales nationwide sold at an average 15 percent discount.

More on “distressed sales” : In June, distressed homes accounted for 25% of all home resales, the smallest percentage of homes sold with such status since the real estate trade group began tracking the data in 2008.

Despite falling home sales and rising home supplies, however, home resales are expected to return to growth in July. Last month’s Pending Home Sales Index spiked to a 2-year high, and 80% of homes under contract close within 60 days. This portends well for July’s Existing Home Sales data, due in 4 weeks.

Low mortgage rates and rising rents in San Jose and in many U.S. cities continue to fuel the U.S. housing market. Home buyers should expect higher home prices ahead.

Pending Home Sales IndexHomes are going under contract at a quickening pace.

In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.

Statistically, the Pending Home Sales Index reading is significant for two reasons.

First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in California and nationwide is approaching the “stimulated” levels of two years ago — but without the federal stimulus.

This is a positive signal for the housing market.

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.

2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.

And, there’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of San Jose — the Pending Home Sales Index is among the few “forward-looking” housing market indicators.

Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.

80% of homes under contract sell within 2 months so, as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume that home sale figures will rise through the summer.

If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.

EU affecting U.S. mortgage ratesMortgage markets improved only slightly last week despite a large 2-day rally that lasted through Wednesday and Thursday.

Unfortunately for mortgage rate shoppers in San Jose , markets were worse throughout the other 3 days of the week, which kept mortgage rates from dropping to new all-time lows. 

As with many weeks since the start of the year, political and economic action within the Eurozone dictated the direction of domestic mortgage rates. Last week’s 2-day EU Summit was the major driver of markets. 

In the days leading up to the summit, mortgage rates worsened as optimism in summit’s outcome grew. This is because a stable Europe is good for the world’s economy which, in turn, encourages Wall Street investors to move money from “safe investments” such as U.S. mortgage bonds into more risky ones such as equities.

This creates an excess supply of mortgage bonds which causes mortgage rates to move higher.

Then, on the day prior to the summit, the optimism faded. Several Eurozone leaders expressed an unwillingness to compromise, rhetoric which drove investors back into “safe” asset classes, explaining the mid-week drop in mortgage rates.

However, Friday, in a surprise move, EU officials announced a plan to recapitalize Europe’s banks and to reduce borrowing costs for Spain and Italy, once again, pushing investors back into a risk-taking mood.

The news in Europe overshadowed strong housing reports here in the United States.

New Home Sales and the Pending Home Sales Index both gave strong results and inflationary pressures were shown to be in check. The housing market continues its slow, steady recovery.

This week, mortgage rates are expected to remain volatile. The markets have had the weekend to pick through the EU agreement and, later this week, the Bureau of Labor Statistics will release the June 2012 Non-Farm Payrolls report. In addition, this is a holiday week so trading volume is expected to be lighter-than-usual.

Mortgage markets will be closed Wednesday.