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Pending Home Sales Index Shows Small September Gain

The Pending Home Sales Index (PHSI) rose ever so slightly in September, the ""National Association of Realtors"":http://www.realtor.org/news-releases/2012/10/september-pending-home-sales-show-slight-improvement (NAR) reported Thursday, tempering the much-heralded housing sector revival.

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The Index inched up to 99.5, an improvement of 0.3 percentage points over August's 99.2. Economists had expected the index to jump 2.5 percent to 101.7.

The fact that the index--which tracks sales contracts, not completed transactions--barely budged was even more of an industry warning in the wake of ""Wednesday├â┬ó├óÔÇÜ┬¼├óÔÇ×┬ós report"":https://themreport.com/articles/sept-new-home-sales-at-30-month-high-2012-10-24 that new homes sales--also reported on the basis of contracts and not closings--jumped 5.7 percent in the same month.

The NAR noted though the PHSI was up 14.5 percent since September 2011, the 17th straight month of year-over-year increases.

The PHSI and new home sales often move in the same direction--each has increased in all but three months this year--but the magnitude of the changes can vary. Both measures, for example, rose in February but to a different [COLUMN_BREAK]

degree: New home sales jumped 8.0 percent while the PHSI rose just 0.4 percent. In March the measures were mirror images: PHSI rose 3.8 percent and new home sales fell 3.8 percent.

""Only minor movement is likely in near-term existing-home sales,├â┬ó├óÔÇÜ┬¼├é┬Ø suggested NAR chief economist Lawrence Yun, noting ""home contract activity remains at an elevated level in contrast with recent years, but currently appears to be bouncing around in a narrow range.""

PHSI data are generally reflected in the report on existing home sales two months out, meaning the September PHSI points to weak or slow growth in homes sales reported for November.

The slowdown in the PHSI is the second blow to existing home sales, ""which dropped 1.7 percent"":https://themreport.com/articles/sep-home-sales-slip-prices-up-yr-yr-2012-10-19 (closings) in September. Prices also fell month-to-month in September, though the median price rose year-over-year.

Regionally, the PHSI improved in three of the four census regions, falling only in the Midwest, where it dropped 5.8 percent but remained 19.3 percent above its year-earlier level. The PHSI rose 4.3 percent in the West but is up only 0.8 percent in the last year. In the Northeast, the index rose 1.4 percent and is 26.1 percent higher than a year ago, and in the South, the PHSI increased 1.0 percent and is 17.6 percent above September 2011.

The index is based on a large national sample, representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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