Tuesday, February 03, 2009

Pending Home Sales Index Increases in December

by Bill McBride on 2/03/2009 10:00:00 AM

From the NAR: Pending Home Sales Show Healthy Gain

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, rose 6.3 percent to 87.7 from an upwardly revised reading of 82.5 in November, and is 2.1 percent higher than December 2007 when it was 85.9.
...
Lawrence Yun, NAR chief economist, said the index shows a modest rebound. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” he said. “The biggest gains were in areas with the biggest improvements in affordability.”
emphasis added
Last month the Pending Home Sales Index declined, suggesting a decline in existing home sales for January. This report suggests a rebound in February - but also note Yun's comment - most of this rebound will be in areas with significant foreclosure resales.

Note: Existing home sales are reported at the close of escrow, pending home sales are reported when contracts are signed. The Pending Home Sales index leads existing home sales by about 45 days, so the December report suggests existing home sales will increase from January to February.