WASHINGTON (March 4, 2010) — Pending home sales are down and additional declines are expected due to abnormal weather conditions, according to the National Association of Realtors®.
The Pending Home Sales Index (PHSI), which measures the number of home-sales contracts signed, fell 7.6% in December, but remains 12.3% higher than it was in January 2009.
“January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit,” said NAR Chief Economist Lawrence Yun. “Moreover, the abnormally severe and prolonged winter weather, which affected large regions of the U.S., hampered [real estate] shopping activity in February.”
He predicted more abnormal swings are expected in housing data to come. “We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” Yun said. “The real question is what happens in the second half of the year. If there is sufficient job creation, housing can become self-sustaining with stable to modestly rising home prices because inventory has been trending downward.”
The PHSI in the Northeast fell 8.7%, but is 20.5% higher than January 2009. In the Midwest, the index dropped 8.9%, but is 11.8% above a year ago. Pending home sales in the South slipped 2.1%, but the index is 18.0% higher than January 2009. In the West, the index dropped 13.2%, but is 1.4% above a year ago.
The PHSI 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.