Pending home sales continued to gain in November and reached the highest level in 19 months, according to the latest Pending Home Sales Index (PHSI) from the National Association of Realtors (NAR). The PHSI is a forward-looking indicator based on contract signings, and increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.
The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the first-time homebuyer tax credit. The data reflects contracts, but not closings.
“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high," said Lawrence Yun, NAR chief economist. "Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”
Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.
The PHSI in the Northeast rose 8.1 percent to 77.1 in November, but is 0.3 percent below the totals of November 2010. In the Midwest, the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West, the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.
“November is doing reasonably well in comparison with the past year," said Yun. "The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead."