Pending homes sales continued its upward trend in November, following strong growth October. The National Association of Realtors (NAR) announced a 3.5% increase in its Pending Home Sales Index (PHSI) in November to 92.2, following growth of 10.1% in October. The index has now shown solid gains in four of the past five months, rising 22% from its low of 75.5 in June. Existing home sales typically lag the PHSI by one to two months, thus the rise in the PHSI signals further improvement in existing home sales in December 2010 and January 2011.
Across the regions, the PHSI surged in the West, rising 18.2%, and a small gain was observed in the Northeast (+1.8%). However, the Midwest (-4.2%) and South (-1.8%) experienced a modest decline. Relative to a year ago, the PHSI is up marginally in the West (0.4%), but down between 6.2% (Northeast) and 7.7% (Midwest) in the other regions.
The NAR suggests the rise in the November PHSI is the result of “… steady improvements in the economy …” which “… are helping to bring buyers back to the market.” They also note that “… all indicators are pointing to a gradual housing recovery …” through 2011 and 2012.
The NAHB concurs with the NAR view. With the economy and the employment situation expected to improve in 2011 and 2012, we expect steady improvement in existing homes sales, with gains of 6% in 2011 and 19% in 2012. By the fourth quarter of 2012, the NAHB anticipates that existing home sales will rise to around 5.6 million units – a return to pre-recession levels.