The National Association of Realtors (NAR) seasonally adjusted pending home sales index again improved and continues in expansion. Our analysis of pending home sales agrees – and we are projecting a relatively good month for existing home sales in May 2015.
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Pending home sales are based on contract signings, and existing home sales are based on the execution of the contract (contract closing).
The NAR reported:
- Pending home sales index was up 3.4% month-over-month and up 14.0% year-over-year.
- The market was expecting month-over-month growth of -1.7 % to 2.5 % (consensus 0.8%) versus the growth of +3.4% reported.
Econintersect‘s evaluation using unadjusted data:
- the index growth was up 2.0% month-over-month and up 19.0% year-over-year.
- The current trends (using 3 month rolling averages) improved – and are in expansion.
- Extrapolating the pending home sales unadjusted data to project May 2015 existing home sales, this would be a 16.4% gain year-over-year for existing home sales.
Unadjusted 3 Month Rolling Average of Year-over-Year Growth for Pending Home Sales (blue line) and Existing Home Sales (red line)
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From Lawrence Yun , NAR chief economist:
…. the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. Realtors® are saying foot traffic1 remains elevated this spring despite limited — and in some cases severe — inventory shortages in many metro areas. Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.
As a result, home prices are up and accelerating in many markets.
The National Association of Realtors (NAR) pending home sales index offers a window into predicting existing home sales. The actual home sale might appear in the month the contract was signed (cash buyers can close quickly), or in the following two months.
