Housing Analysis, Pending Home Sales, Real Estate News

Pending Home Sales Index Forecasts Rise In Summer Sales

July 3, 2012 by · 1 Comment 

Contract Pending Sign by MarkCoffeyPhoto | iStockphoto.comHomes are going under contract at a quickening pace.

In May, for the second time in 3 months, the Pending Home Sales Index crossed the 100 barrier, stretching to 101.1. A “pending home sale” is a home under contract to sell, but not yet sold.

Statistically, the Pending Home Sales Index reading is significant for two reasons.

First, the index’s reading is at its highest since April 2010. From this, we infer that today’s pace of home buying in Northwest Indiana and suburbs of Chicago Illinois is approaching the “stimulated” levels of two years ago — but without the federal stimulus.

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This is a positive signal for the housing market.

Second, because the Pending Home Sales Index is a relative index; and, because it was assigned a value of 100 upon its inception in 2001, readings higher than 100 imply that the housing market is performing better than it did during the index’s first year.

2001 happened to be a strong year for housing. 2012, it seems, is shaping up to be a better one.

There’s another reason why the Pending Home Sales Index matters so much to buyer and sellers of Crown Point Indiana. The Pending Home Sales Index is among the few “forward-looking” housing market indicators.

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Rather than report on how the housing market looked 30-60 days in the past, as the Case-Shiller Index does; or the Existing Home Sales report, the Pending Home Sales Index looks 30-60 days to the future.

80% of homes under contract sell within 2 months. So as the Pending Home Sales Index goes, so goes housing. Based on May’s data, therefore, we can assume home sale figures will rise through the summer.

If you’re shopping for homes right now, consider going under contract while the market remains somewhat soft. Mortgage rates are low and so are home prices. It makes for good home-buying conditions.

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One Response to “Pending Home Sales Index Forecasts Rise In Summer Sales”
  1. jkbarath says:

    Based on recent pre-approval requests from home buyers throughout Northwest Indiana, I would say that the summer is already heating up. Cathy Payne Mattan, Jamie Lynne Cooper  and Melissa Wayte Osika ….how are pending sales doing in your local markets?

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