July 28, 2011 (Chris Moore)
The Pending Home Sales Index (PHSI) increased by 2.4 percent to 90.9 in June according to the National Association of Realtors (NAR). This was the second consecutive month the PHSI has increased and puts the Index back near the levels seen in March before a huge 11.6 percent drop in April.
The PHSI is now 19.8 percent above the 75.9 reading in June of last year with all regions experiencing double digit gains over last year. Half of the four regions registered monthly gains.
Pending home sales increased in the South and the West with the South increasing 4.4 percent to an index of 99.2, which was 19.1 percent higher than June 2010, and in the West, the index rose 6.4 percent to 107.0 in June and is 16.4 percent above a year ago.
The PHSI declined in the Northeast and the Midwest with the Northeast slipping 0.4 percent to 68.9 in June, but still 19.4 percent higher than June 2010, and in the Midwest, the index fell 3.7 percent to 79.7 in June, but is 26.4 percent above a year ago.
The PHSI is a forward looking indicator which generally indicates closings one to two months in the future. A decrease of 0.8 percent in June’s existing home sales was a huge disappointment following May’s 8.2 percent jump in pending home sales but NAR feels that with two consecutive months of increased activity, overall improvement in closed sales in the upcoming months should be forthcoming.
Lawrence Yun, chief economist of NAR, once again stressed that tight credit, economic uncertainty, and Washington policy makers continue to keep a dark cloud hovering over the housing market.
“The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage. Washington also should not rock the boat with policy changes that would negatively impact affordable credit or otherwise increase the cost of buying or owning a home,” Yun said.
Tags: NAR, pending home sales, existing home sales, tight credit, economic uncertainty, Washington policymakers, housing recovery