Pending sales of existing homes stayed ahead of year-ago levels, according to the National Association of Realtors®’ report on December statistics. The Pending Home Sales Index declined 3.5% to in December compared with November, but is 5.6% above December 2010. The data reflect contracts to buy homes, but not closings.
Lawrence Yun, NAR chief economist, said the trend line remains positive. “Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,” he said. “Contract failures remain an issue, reported by one-third of Realtors® over the past few months, but home buyers are not giving up.”
Yun said some buyers successfully complete the sale after a contract delay, while others stay in the market after a contract failure and make another offer. “Housing affordability conditions are too good to pass up,” he said.
By region the Realtors® Pending Home Sales Index declined in the Northeast by 3.1% to 74.7 in December and is 0.8% below a year ago. In the Midwest the PHSI rose 4.0% to 95.3 and is 13.3% higher than December 2010. Pending home sales in the South slipped 2.6% to an index of 101.1 in December but are 4.9% above a year ago. In the West the index fell 11.0% in December to 107.9 but is 3.7% higher than December 2010.
Note: The Pending Home Sales 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 but the transaction has not closed, though the sale usually is finalized within one or two months of signing. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
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