Pending homes sales retreated in September, following solid gains in July and August. The National Association of Realtors (NAR) announced a 1.8% decline in the Pending Home Sales Index (PHSI) in September, following growth of 4.4% in August and 4.5% in July. With existing home sales typically lagging the PHSI by one to two months, the PHSI signals to a decline in existing home sales by November.
Across the regions, the PHSI was down in the Midwest (-5.7%), South (-3.5%) and Northeast (-1.7%), but up in the West (+3.5%). Relative to a year ago, PHSI is down sharply (between 19% and 33%) in all regions.
The NAR suggests the decline in the September PHSI signals “… an uneven recovery entering 2011 …”, with the foreclosure moratorium “… likely to cause some disruptions and contribute to an uneven sale performance in the months ahead.” However, they also note that “… there appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves.”
On a positive note, the Bureau of Labor Statistics announced a healthy increase in employment in October, with 151,000 new jobs added, all from increased private employment. With the recovery in housing demand dependent on an improving employment situation, October’s jobs growth signals that the outlook for the housing market is improving. We expect the employment situation to improve from here, turning in better numbers through 2011 and 2012, with housing demand following closely behind.