The Pending Home Sales index declined 2.6% to 75.7, based on contracts signed in June and from a revised level of 77.7 in May 2010, according to the National Association of Realtors (NAR). This level is 18.6% below June 2009, when the level was at 93.0. The decline in pending home sales came after the expiration of the home buyer tax credit.
Lawrence Yun, NAR chief economist, said, “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve.”
“Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices,” he said.
While the Northeast, Midwest and West all saw a drop in the sales index, the South rose 3.7% to an index of 85.8. This number is still, however, 13.3% below the June 2009 rate. The Northeast dropped 12.2% to 58.8 in June and is 25.4% lower than a year ago. The index fell 9.5% in the Midwest to 64.1 and is 27.8% lower than June 2009. The West index slipped slightly with a 0.2% drop to 85.1. The West index is, however, 14.2% below a year ago.
About the NAR Pending Home Sales Index
The Pending Home Sales Index is a leading indicator for the housing market and is based on pending sales of existing homes. A sale is pending when the seller(s) and the home buyer(s) have signed the contract, but the transaction has not closed.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year examined, as well as, the first of five consecutive record years for existing-home sales.