The Pending Home Sales Index, a forward-looking indicator based on contracts signed, decreased 0.5 percent in February to 96.5, down from 97.0 in January. However, the PHSI is up 9.2 percent from the same period one year ago when the PHSI was 88.4.
The National Association of Realtors (NAR) reported that over the past year the PHSI increased in the Northeast, Midwest and South, falling only in the West. However, only in the Midwest were pending home sales up in February. In the Northeast the PHSI fell 0.6 percent in February, but is up 18.4 percent from a year ago. The PHSI in the Midwest increased 6.5 percent in February and is up 19.0 percent from the same period a year ago. In the South the PHSI dropped 3.0 percent in February and is up 7.8 percent from a year ago. In the West the index dropped 2.6 percent in the current period and is down 1.8 percent over the past year.
If contracts closed at the same time they were signed, this graph would be the correspondence between sales and the PHSI. So the PHSI is a good indicator of what is likely to happen with existing home sales which are the contract closings. We anticipate that existing sales that will be reported on April 19, 2012, will reflect the closing of contracts signed and driving today’s PHSI.