Wednesday, June 02, 2010

Pending Home Sales "Surge" in April

by Bill McBride on 6/02/2010 10:00:00 AM

From the NAR: Pending Home Sales Surge Continuing

The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Once again this is no surprise - the tax credit has pulled demand forward, and existing home sales will decline after June (existing home sales are counted when the contract closes).

I suspect a number of these homes will never close. I've heard stories of buyers entering into two deals at the end of April, intending to cancel one. Also some short sales will probably not close on time because of the lengthy process.

Post title next month: Pending home sales collapse in May!