Home Sales Level Off

Home sales are expected to hold fairly steady in the months ahead with a modest lift early next year, indicates NAR's Pending Home Sales Index.
REALTOR® Magazine Online
Home sales are expected to hold fairly steady in the months ahead, according to the latest reading by the NATIONAL ASSOCIATION OF REALTORS® on pending home sales.

The Pending Home Sales Index, based on contracts signed in September, slipped 1.1 percent to a level of 109.1, following a 4.7 percent gain in August. But the index remains 13.6 percent below September 2005.

David Lereah, NAR’s chief economist, says the index shows home sales will not be moving much in one direction or another. “The present level of home sales is relatively high in historic terms, and we can expect generally minor movements around this level,” Lereah says. “We don’t expect to see any changes of note until early next year when we’re likely to see a modest lift to home sales.”

The market is currently a little lower than expected as buyers try to time their entry, he adds. “In the meantime, there’s some build up in demand that will move when consumers realize that conditions are optimal for them,” Lereah says.

Regional Matters

Here’s what happened regionally across the United States:

    • Midwest: the PHSI rose 2.1 percent in September to 96.4, but was 18.4 percent
      below September 2005.

    • West: the index slipped 0.4 percent to 112.5 in September and was 15.2 percent
      below a year ago.

    • South: the index eased 1.3 percent in September to 125 and was 9 percent below
      September 2005.

    • Northeast: the PHSI fell 5.9 percent to 89.9 in September and was 15.9 percent
      lower than a year earlier.

An index of 100 is equal to the average level of contract activity during 2001 — the first year to be examined and the first of five consecutive record years for existing-home sales. A closer relationship exists between annual changes in the index and year-ago changes in sales performance than with month-to-month comparisons.

The PHSI is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed; pending sales typically are finalized within one or two months of signing.