Archive for Pending Home Sales
More Housing Strength : Pending Home Sales Surged In October
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If you’re waiting for home prices to reach its bottom, you may have missed your window.
After 3 consecutive months of easing, the Pending Home Sales Index jumped 10 percent in October, lending credence to the belief that housing is in recovery.
The Pending Home Sales Index is a monthly publication from the National Association of REALTORS®. It measures the number of homes under contract to sell nationwide. October’s reading is the highest for all of 2011, and the second-highest dating back to April 2010.
April 2010 was the last month of the last year’s federal home buyer tax credit.
For buyers and sellers in Lake Geneva real estate and nationwide, the Pending Home Sales Index is a housing metric worth watching. Different from the Existing Home Sales and New Home Sales reports which report on “the past”, the Pending Home Sales Index is a forward-looking housing market indicator.
According to the National Association of REALTORS®, 80% of homes under contract close within 2 months.
The majority of the rest close within Months 3 and 4.
The spike in October’s Pending Home Sales Index, therefore, foretells a strong Existing Home Sales report for November and December. Not that we should be surprised! Home builders have been telling us for weeks that the market is strengthening, and that home supplies are at multi-year lows.
The only wild-card is the market’s out-sized contract failure rate. One in three pending home sales failed to close in October — nearly double the rate of the month prior and 4 times the rate of October 2010. Should this high failure rate continue, the Pending Home Sales Index’s role as a forward-looking indicator would be muted.
Overall, though, new buyer demand for housing accompanied a smaller home supply will result in higher home prices through 2012. And, with mortgage rates expected to rise, monthly carrying costs will be higher, too.
Looking at the data, the best time to buy a home may be right now.
Pending Home Sales Index Slips For 4th Straight Month
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Nationwide, fewer homes are going under contract to sell.
According to the National Association of REALTORS®, the Pending Home Sales Index fell 5 percent last month. September marks the fourth consecutive month in which the index has dropped.
The Pending Home Sales Index is a monthly index which measures the number of homes under contract to sell, but not yet closed. As such, it’s among the few “forward-looking” housing indicators; a data set meant to predict future home sales.
80% of homes under contract close within 2 months so, if the September Pending Home Sales Index is to be believed, we should expect home sales to decline through October and November.
And that’s before we account for cancelled contracts.
Also from the National Association of REALTORS®, we learn that 18 percent of homes under contract failed to close in September. This is double the failure rate from September 2010 and it, too, should drag Existing Home Sales volume lower this fall.
On a seasonally-adjusted, regional basis, the Pending Home Sales Index fell everywhere.
- Northeast Region: -4.7% from August
- Midwest Region : -6.2% from August
- South Region : -5.5% from August
- West Region : -2.1% from August
For home buyers and sellers in Lake Geneva mortgage , though, regional data remains too broad to be useful. Housing markets are local, meaning that each block on each street on each city has its own distinct economy. When 9 states are grouped into a single “region”, it’s neither helpful nor relevant to people making buy/sell decisions.
That said, the Pending Home Sales Index remains important because it’s about housing, and housing is a keystone of the U.S. economic recovery.
The market looks ideal for buyers. Home prices are rising, but slowly; and mortgage rates remain near rock-bottom levels. Home affordability is high and should remain that way for the next few weeks.
If you’re shopping for a home, it’s an excellent time to go under contract.
Lake Geneva Real Estate – Pending Home Sales Unexpectedly Spike In May
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The summer housing market is heating up.
According to data from the National Association of REALTORS®, the Pending Home Sales Index smashed analyst expectations, jumping 8 percent on a monthly basis in May.
Wall Street calls were for an increase of just 0.5 percent.
It was a surprise result that, coupled with the recent stronger-than-expected New Home Sales and Existing Home Sales readings, has sparked housing market optimism in Lake Geneva, Wisconsin and nationwide.
The biggest reason for the optimism is because of what the Pending Home Sales Index measures.
In contrast to “traditional” housing data which reports on how housing performed two months ago, for example, the Pending Home Sales Index is a forward-looking indicator; a predictor of future market activity based on freshly-written contracts between buyers and sellers.
In other words, the Pending Home Sales Index looks ahead — not back. This is reflected in its methodology which states that 80% of homes under contract close within 2 months, and a large percentage of the rest close within Months 3 and 4.
Because May’s Pending Home Sales Index rose sharply, therefore, we can expect similar jumps in the Existing Home Sales figures of June and July.
For housing and home prices, this is a positive but the gains won’t apply to each home equally. The Pending Home Sales Index is still a national report for a market built on local sales. What’s happening on your particular street in your particular neighborhood may not reflect what’s happening somewhere else.
For accurate, real-time data in your local market, ask a Lake Geneva real estate agent for statistics.
“Homes Under Contract” Plunge 12 Percent In April
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Hurt by foul weather and a soft market, the Pending Home Sales Index plunged 12 percent in April.
The monthly index is published by the National Association of REALTORS® and measures the number of homes on which new contracts have been written.
It’s the association’s lone “forward-looking” report; meant to predict future, closed home sales. 80% of homes under contract close within 2 months.
Therefore, if the April Pending Home Sales Index is accurate, we should expect home sales to decline through June and July.
On a regional basis, “pending homes” varied. The Northeast Region posted growth. None others did.
- Northeast Region: +1.7% from March
- Midwest Region: -10.4% from March
- South Region: -17.2% from March
- West Region: -8.9% from March
But even regional data remains too broad to be useful to everyday buyers and sellers in the Lake Geneva real estate market. Housing is local and that means that each block, of each street, in each city has its own market and economy. Grouping 9 states into a single “region” is neither helpful nor relevant.
That said, we can’t ignore the data in its entirety.
Housing is believed to be a key component in the nation’s economic recovery. Fewer home sales will retard growth, and slower growth leads Lake Geneva mortgage rates down.
Home Affordability hit record-highs last quarter, and should do the same in this one. Homes now sell at discounts to prior prices and mortgage financing is cheap. Buyers tend to be drawn to favorable markets such as this, and that will pressure home prices higher.
If you’re in the market for a home today, conditions look good. Talk to your real estate agent to gauge your options. If you’re unsure of which agent to talk to ask me and I’ll gladly share the names of the best realtors in the market.
The National Association of REALTORS® Pending Home Sales Index rose for the third straight month last month.
A “pending home sale” is a home under contract to sell, but not yet closed.
The Pending Home Sales Index rose 5 percent in March, posting its second-highest reading since April 2010. Not coincidentally, that month marked the expiration of last year’s federal home buyer tax credit.
Home buyers and sellers in Lake Geneva real estate would do well to watch the Pending Home Sales Index each month. This is because — unlike most government and private data — the Pending Home Sales Index is a “forward-looking” indicator.
Because 80% of “pending” homes close within 2 months, and a significant share of the rest close within months 3 and 4, the Pending Home Sales Index tends to correlate to future strength (or weakness) in housing.
The Pending Home Sales Index, in other words, is an excellent precursor to the Existing Home Sales report, issued monthly.
By region, the Pending Home Sales Index varied last month.
- Northeast : -3.2% from February
- Southeast : +10.3% from February
- Midwest : +3.0% from February
- West : +3.1% from February
All 4 regions were worse from a year ago.
As with everything in housing, however, we must remember that real estate is neither national, nor regional. It’s local. Sales volume may be higher in areas like the Midwest, but that doesn’t mean that all Midwest markets are experiencing similar gains, if any gains at all.
To get local real estate data , talk to a real estate agent that specializes in that area. It’s the best way to know what’s happening on the street level.
Home Sales Are Back On The Rise After A 2-Month Pullback
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Just one week after reports of Existing Home Sales and New Home Sales plunging, the housing market is signaling that auturm may fare better than did summer.
The number of homes under contract to sell rose 5 percent in July.
The data comes from the July Pending Home Sales Index, as published by the National Association of Realtors®. By definition, a “pending home sales” is a home that is sold, but not yet closed.
Historically, 80% of such homes close within 60 days which makes the Pending Home Sales Index an excellent, forward-looking indicator for the real estate market.
Indeed, the nationwide drop in home sales this summer was foreshadowed by the Pending Home Sales report. The index dropped 30 percent in May. Then, two months later in July, it was shown that Existing Home Sales volume dropped 29 percent.
That’s a strong correlation.
Now, to be fair, the July Pending Home Sales Index is still relatively low; the second-lowest on record and well below last year’s numbers. But, the tick higher last month shows how housing may be stronger than than what the headlines report.
It appears that buyers of Lake Geneva real estate took advantage of rising inventory, cheap financing, and stagnant prices, and pushed the market forward. We should expect similarly promising numbers when September’s Existing Home Sales data is released.
Lake Geneva Home Buyers See Dollar Signs As The Pending Home Sales Index Falls
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The Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.
The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of Lake Geneva homes under contract close within 60 days, according to the National Association of Realtors.
June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer of Lake Geneva real estate, the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.
Plus, there’s other positives in the market for today’s buyers:
- Home supplies are up, which creates competition among sellers
- Builder confidence is down, which leads to “free” upgrades and incentives
- Lake Geneva mortgage rates are low, which increases cash flow and disposable income
All things equal, the current home buying conditions haven’t been this favorable in years.
The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, Lake Geneva mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.
If you’re planning to buy a home later this year, consider moving up your time frame.
It’s an excellent time to be a Lake Geneva home buyer.
The Pending Home Sales Index plunged in May 2010, just one month after the expiration of the federal home buyer tax credit program.
The Pending Home Sales Index is now at a record-low level.
A “pending home sale” is an existing home under contract to sell, but not yet closed. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days.
Because of this timeline, we can expect the summer’s Existing Home Sales to be weak, too. With fewer Lake Geneva real estate homes going under contract, fewer homes can close.
On the surface, May’s Pending Home Sales Index looks like terrible news for housing. And, if you’re a seller, it just might be. But, if you’re a buyer, the story reads differently. Just consider the market conditions.
A broad look at the housing market shows:
- Home supplies are rising in most markets
- Home sales are falling in most markets
- Lake Geneva mortgage rates are at all-time lows
In other words, in most markets, more sellers are competing for fewer buyers, and the “winning” buyers are financing their homes at the lowest rates in history.
It’s an excellent time to be a home buyer of Lake Geneva real estate.