Pending home sales rising
Pending home sales, or residential real estate contracts signed, rose 7.3 percent in November from October, rising 5.9 percent year over year, according to the National Association of Realtors (NAR), putting pending home sales at the highest level in 19 months.
Each region performed differently as pending home sales in the Northeast rose 8.1 percent for the month but fell 0.3 percent for the year. In the Midwest, levels rose 3.3 percent for the month, rising 9.5 percent for the year and in the South increased 4.3 percent for the month, rising 8.7 percent for the year. The West jumped 14.9 percent in November and is now 2.9 percent higher than a year ago.
The pending home sales index is used as a forward-looking indicator as a means of forecasting how existing and new home sales will perform in coming months. November’s positive performance hit the levels of April 2010 which was just prior to the expiration of the home buyer tax credit, implying a rising interest in the market despite tight lending and contract failures.
NAR Chief Economist, Dr. Lawrence Yun said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”
“November is doing reasonably well in comparison with the past year,” Yun added. “The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead.”
Outlook for 2012
At the NAR annual conference in November, the Economic Issues and Residential Real Estate Trends Forum was held, outlining the current state of affairs and what the near future holds. NAR Chief Economist Dr. Lawrence Yun gave a presentation called “Economic and Housing Market Outlook” and Dr. Richard Peach, Senior Vice President of the Macroeconomic and Monetary Studies Function at the Federal Reserve Bank of New York presented a “U.S. Macro Overview.” Below is the full presentation: