Jim Guido's Blog

The National Association of Realtors is reporting that pending home sales increased in March and are well above a year ago, another signal the housing market is recovering.

The Pending Home Sales Index,*which is a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9.  This reported data reflects contracts but not closed sales.

The index is now at the highest level since April 2010 when it reached 111.3.

The report is showing that 2012 could be a year of recovery for housing.  First quarter sales closings were the highest first quarter sales in five years.  This latest news regarding contract signing activity suggests that the second quarter will be equally good.

The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011.  In the Midwest the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago.  Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011.  In the West the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

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*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.

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.

The median price for an existing, single-family home in California rose 1.6 percent in March
compared with the year before, marking the first year-over-year increase in 16 months, the
CALIFORNIA ASSOCIATION OF REALTORS® reported Monday.
Making sense of the story

 The statewide median price of an existing, single-family detached home jumped 9.2
percent to $291,080 in March from February’s $266,660 median price and was up 1.6
percent from a revised $286,550 recorded in March 2011. The month-to-month increase
was the largest since March 2004.

 Closed escrow sales of existing, single-family detached homes in California totaled a
seasonally adjusted annualized rate of 505,360 units in March, according to information
collected by C.A.R. from more than 90 local REALTOR® associations and MLSs
statewide. Sales in March were down 4.5 percent month-over-month and 2.3 percent
year-to-year.

 The statewide sales figure represents what would be the total number of homes sold
during 2012 if sales maintained the March pace throughout the year. It is adjusted to
account for seasonal factors that typically influence home sales.

 “Housing inventory remains extremely tight throughout the state and at levels severely
under normal market conditions,” said C.A.R. Vice President and Chief Economist Leslie
Appleton-Young. “In areas, such as Los Angeles and Riverside counties, where the
Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot
program, inventory is running at levels well below the long-run average. These low
inventory levels demonstrate that the pilot program is not necessary in California.”

 The pilot program calls for the sale of more than 600 Fannie Mae-owned foreclosed
homes in Los Angeles and Riverside counties to institutional investors.

Read the full story at:

http://on.car.org/Ia6UtV