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Wednesday, September 28, 2011

Lawler: Best Guess for August Pending Home Sales

by Calculated Risk on 9/28/2011 05:31:00 PM

From economist Tom Lawler:

It is difficult to “work up” an estimate of the NAR’s Pending Home Sales Index from local Realtor associations/boards/MLS, for several reasons. First, many of these A/B/M’s don’t release “new” pending sales data (that is, data on contracts signed in a month). Indeed, many don’t track such data at all, and as a result the NAR’s PHSI is based on a sample size about half as large as that used to estimate closed existing home sales. And second, some publicly-released A/B/M reports are run early in the month, and have preliminary pending sales that are often revised by a lot in subsequent months.

As such, my estimate of the NAR’s PHSI is subject to far more uncertainty than are my estimates for closed existing home sales.

Based on the data I do have, however, I estimate that the NAR’s August Pending Home Sales Index will probably come in about 3.5% higher than the July PHSI on a seasonally adjusted basis. While, as always, reported YOY gains vary massively across various A/B/M’s, almost all showed YOY gains and many – including but not limited to several in the Midwest – showed hefty YOY increases. Of course, July’s PHSI on a seasonally adjusted basis was 9% higher than last August’s, and this August had one more business day than last August. As such, a national YOY gain in unadjusted pending sales for August of close to 12% would produce a flat seasonally adjusted reading versus July.

In looking at various regional reports, only a handful showed YOY declines (including a few but not even close to all Florida markets), several showed modest single-digit gains (including several in the Northeast), but quite a few showed YOY gains of 20% or more (and a few by a LOT more).

A 3.5% gain would be well above the “consensus” forecast of a moderate decline.

CR Note: The NAR is scheduled to release Pending Home sales for August tomorrow (Thursday) at 10 AM ET. The consensus is for a 2% decrease in the index.