The Uptrend Continues in Pending Home Sales for July

I was excited to read research out of the National Association of Realtors in Washington DC, that pending home sales are up for the fifth consecutive month.  An uptrend of this duration has not occurred since July of 2003 (over 6 years ago).  The Pending Home Sales Index is a future oriented indicator that is based on contracts signed in June 2009.  Numbers for this index rose 3.6% to 94.6% from a revised reading of 91.3% in May of 2009.  This is 6.7% above June of 2008’s reading of 88.7%.  Our Pending Home Sales Index here in the South is among the strongest in the Nation with comparative figures as follows:
To better understand what these figures mean and how the Pending Home Sales Index is compiled, I have included some background information.  The figures came from the National Association of Realtors which is the largest trade association in America.  It represents about 1.2 million members who work in various parts of the residential and commercial real estate industries. The Pending Home Sales Index is one of the key indicators for evaluating the housing sector’s performance.  A home sale is listed as pending when a contract has been signed, but the sales transaction is not officially closed.  Generally, a sale is finalized within 1-2 months after signing.  The Pending Home Sales Index is compiled from a large national sample, usually about 20% of the transactions for existing home sales.  The significance of the index shows trends in sales-contract activity.  Data since 2001 shows greater accuracy in viewing the annual index changes or from the comparison of the same month vs that month a year earlier, rather than predicting trends through month to month changes of the same year.

An index reading of 100 equals the average level of contract activity in 2001. This was the first year to be examined and it was the first of 5 consecutive record years for existing home sales.

Examining the Index with this background information gives you better understanding of what it means.  However, to really find the answers to your real estate questions here in the Great Smoky Mountains area feel free to contact me at The Jason White Team.