RISMEDIA, Feb. 2, 2007-Pending home sales are higher, affirming the stabilization that is occurring in home sales, according to the National Association of Realtors®.
The Pending Home Sales Index, based on contracts signed in December, rose 4.9% to an index of 112.4 from an upwardly revised level of 107.2 in November, but is 4.4% lower than December 2005.
The monthly gain was the biggest increase since March 2004 when the index rose 6.9%. A steady narrowing from year-ago readings has been observed since last July when the level of unsold housing inventory peaked at an all-time high.
David Lereah, NAR's chief economist, said a moderate rise in existing-home contracts is a welcome relief for the real estate markets.
"Some of the monthly gain may be weather related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," he said. "I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity. 2007 promises to be the fourth best year on record."
The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.
The upturn was broad based, with all regions showing an increase. The PHSI in the Northeast jumped 8.1% in December to 89.9 but was 4.8% below a year ago. The index in the West rose 5.3% to 112.2 but was 4.9% below December 2005. The index in the South increased 4.3% to 129.8 but was 4.2%lower than a year earlier. In the Midwest, the index was up 3.2% in December to 103.2 but was 4.3% below December 2005.
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