Pending Home Sales
Nov Oct Sep Aug Jul Jun
PHS Index 92.2 89.1 80.9 82.4 78.9 75.5
Source: National Association of Realtors; Index, 2001=100.
- The pending home sales index rose 3.5% in November to 92.2 from an index of 89.1 in October.
- November’s index is 5% below the index from a year ago.
The 3.5% increase in the pending home sales index was expected. Existing home sales hit bottom this summer and have increased since. However, the level of the index remains low compared to 2009, suggesting that housing demand remains relatively weak.
Given that existing home sales hovers well below the 5 million units mark, we expect the pending home sales index to continue its modest ascent throughout 2011. In fact, affordability conditions have improved markedly over the past two years, providing a favorable backdrop for home buying in 2011, but only if the economy can expand sufficiently to generate healthy job growth.
In the near term, its possible home sales could slacken due to current loan processing moratoriums that are expected to temporarily reduce the number of foreclosure sales. But in the longer-term, foreclosures will once again flood the market, propping up the home sales numbers.