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Pending Home Sales Healthy and Above Year-Ago Levels for Past 21 Months

March 1, 2013

Written by: Sophia Fain

Pending home sales remain in healthy territory after its 4.5 percent rise in January. Pending home sales have continually been above year-ago levels for the past 21 months, according to the National Association of Realtors. January’s sales are 9.6 percent above year-ago levels and the highest reading since April 2010 when it hit 110.9 due to the home buyer tax credit.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes.

Lawrence Yun , NAR chief economist, said inventory is the key to this year’s housing market. “Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It’s also why we’re experiencing the strongest price growth in more than seven years,” he said.

“Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages,” Yun said.

By region, the Northeast led with an 8.2 percent gain to 84.8 in January followed by the South with a 5.9 percent increase. The Midwest followed with a 4.5 percent increase while the West barely edged up 0.1 percent. The Western region is the only index that is below year-ago levels. Yun expects approximately 5.0 million existing-home sales this year, with a chance of 7+ percent growth if inventory supplies remain low. (Source: National Association of Realtors)