by Calculated Risk on 3/04/2010 10:02:00 AM

From the NAR: Pending Home Sales Down; Severe Weather Impacting Market

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December ...

“We will see weak near-term sales followed by a likely surge of existing-home sales in April, May and June,” [Lawrence Yun, NAR chief economist] said. “The real question is what happens in the second half of the year."

The Pending Home Sales Index isn't perfect, but this does generally lead existing home sales by about 45 days. The January index suggests sales in February and March will probably be lower than the 5.05 million SAAR in January (Seasonally Adjusted Annual Rate).

I also expect sales to increase in May and June (above the normal seasonal factors) because of the deadline for the home buyer tax credit. Although I don't think we will see an increase like last year when sales spiked to 6.54 million SAAR in November.

The NAR is currently forecasting an annualized existing home sales rate of 5.1 million homes in Q1, 5.8 million in Q2, and about 5.5 million in the 2nd half of 2010. I think those numbers are generally high - especially in the 2nd half of 2010.