A monthly index that tracks pending sales of U.S. existing homes rose to its highest level in 19 months in November, according to a report released today from the National Association of Realtors.
NAR’s Pending Home Sales Index, which is based on purchase contracts signed but not yet closed, jumped 7.3 percent from an upwardly revised 93.3 in October and 5.9 percent compared to November 2010, to 100.1. That’s the highest index score since April 2010, just before the deadline for a federal homebuyer tax credit program, when the index was at 111.5, NAR said.
The index is not affected by the trade group’s recent "rebenchmarking" of existing-home sales figures because it uses a different methodology based directly on contract signings and the index is adjusted for seasonality, the trade group said.
The index typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group and a robust year for existing-home sales.
The index rise may be partially due to delayed transactions resulting from "unusually high" contract failures, said Lawrence Yun, NAR’s chief economist, in a statement.
"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," Yun said.
"November is doing reasonably well in comparison with the past year. 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," Yun added.
The index rose month to month in all four U.S. regions and year over year in all except the Northeast where it remained essentially flat. The Midwest saw the biggest annual increase (9.5 percent) to 91.6, followed by the South, which saw an increase of 8.7 percent to 103.8.
In the West, the index rose 2.9 percent to the highest level among the regions, 121.2. The Northeast had the lowest index level in November, 77.1, dipping a slight 0.3 percent from November 2010.
In its latest economic outlook, also out today, NAR released its first forecast figures for 2013. NAR projects new-home sales fell 5.9 percent in 2011 to 303,000, but will rise 16.2 percent in 2012 to 352,000 and jump a whopping 53.4 percent in 2013 to 540,000.
This year’s median price for new-home sales was an estimated $222,800, a slight 0.8 percent rise from 2010. NAR expects the median will rise 1.9 percent to $227,000 in 2012 followed by a projected 3.3 percent increase to $234,500 in 2013.
Existing-home sales fell 3.7 percent in 2010 from 2009 to 4.18 million units, according to NAR’s rebenchmarked figures. In 2011, sales are expected to rise 1.7 percent to 4.25 million. In 2012, NAR predicts sales will jump 4.7 percent to 4.45 million with a further 5.2 percent increase to 4.68 million in 2013.
The trade group expects the median price for existing homes to drop 4.4 percent this year, to $165,200. Nevertheless, NAR predicts prices will subsequently rise 2 percent in 2012 to $168,500 and another 2 percent in 2013 to $171,800.
For the first time, NAR forecasts rent inflation, predicting rents have risen 2 percent from 2010 this year and will rise 3 percent and 3.5 percent, respectively, in 2012 and 2013.
As in last month’s outlook, the trade group expects this year’s real gross domestic product growth rate to be 1.7 percent with a 2.5 percent rise in 2012. For 2013, NAR projects a 3.1 percent growth rate, back to historical norms.
NAR expects this year’s unemployment rate to average 9 percent, with a drop to 8.4 percent in 2012 and 8 percent in 2013.
The 30-year fixed mortgage rate averaged 4.5 percent in 2011 and will fall slightly in 2012 to 4.3 percent before rising to 4.9 percent in 2013, according to NAR’s projections.
