April pending home sales data
Today, the National Association of Realtors (NAR) has announced that the pending home sales index (PHSI) which measures contracts signed has increased for the third month in a row. Pending home sales rose 6% in April from March and rose 22.4% higher than April 2009.
The PHSI in April was at its highest level since last October which not coincidentally was the month leading up to the tax credit expiration prior to its extension which finally ended in April.
The PHSI is an economic indicator looked to by many as an indicator of the overall health of the residential real estate sector and therefore as one of the leading indicators in the American economy. Whenever sales volume increase consistently, analysts often consider that under current conditions, the sector should improve rather than decline.
How each area is performing:
According to the NAR, “The PHSI in the Northeast jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago. In the Midwest the index rose 4.1 percent to 104.2 and is 17.9 percent above April 2009. Pending home sales in the South slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago. In the West the index rose 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.”
In March, the opposite was true– the South jumped while the Northeast declined, but both are up over the previous year, pointing to an overall stabilization in the residential real estate sector.
Concerns going into the summer
“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” NAR’s Chief Economist, Lawrence Yun said.
“However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues. There could be a sizable number of homebuyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30.”
In response, the NAR has “asked Congress to provide flexibility on the deadline for closing.”
CC Licensed image courtesy of thetruthabout via Flickr.com.