Pending Home Sales Basically Flat in January. Rent or Own?

The National Association of Realtors today released the Pending Home Sales Index for January.

The Pending Home Sales index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Instead, when a seller accepts a sales contract on a property, it is recorded into a Multiple Listing Service (MLS) as a “pending home sale.” Once that transaction settles it becomes an Existing Home Sale.  The majority of pending home sales become Existing Home Sales transactions, typically one to two-months later.

Since pending home sales measure actual existing-home sales, the PHSI provides an accurate and reliable indicator of future home sales activity. Samples show that about 80% of all pending home sales go to settlement within a 2-month time-period (and a significant share of the rest close in month 3 and month 4). Not all pending home sales go to closing though. A certain percentage of properties that go under contract are cancelled (or fallout) before ever going to settlement. This percentage has been on the rise since early 2009.  An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed.

Here is the Reuter's Quick Recap...

28Feb11 RTRS-U.S. JAN PENDING HOME SALES INDEX -2.8 PCT (CONSENSUS -2.2 PCT) TO 88.9 - REALTORS
28Feb11 RTRS-U.S. JAN PENDING HOME SALES -1.5 PCT FROM JAN 2010
28Feb11 RTRS-TABLE-U.S. Jan pending home sales fall 2.8 pct

Plain and Simple: -2.8%. Basically flat just above record lows on a year over year basis. Remember: the purchase market slowed considerably last winter.

“While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes   that need to go through the system,” Yun said. “We should not expect the recovery to be in a straight upward path – it will zig-zag at times.”

(WHY POINT THE FINGER NAR? REALTORS PLAYED NO PART IN THE HOUSING CRISIS?)

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Source: http://www.mortgagenewsdaily.com/02282011_january_pending_home_sales.asp

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