The Pending Home Sales Index, a forward-looking indicator based on signed contracts, decreased 5.5 percent in April 2012, from a downwardly revised 101.1 in March. This decline was preceded by three consecutive months of gains. However, the April PHSI was 14.4 percent higher than in April 2011.
The National Association of Realtors (NAR) reported that although the April PHSI was down in all regions except the Northeast, the April PHSI was up strongly in all regions from the same time a year ago. The April PHSI increased 0.9 percent in the Northeast, but declined 0.3 percent in the Midwest, 6.8 percent in the South and 12.0 percent in the West. The year over year increases were 19.9 percent in the Northeast, 23.0 percent in the Midwest, 13.3 percent in the South and 5.1 percent in the West.
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 May and June existing sales that will be reported on June 21, 2012 and July 19, 2012, will reflect the closing of contracts signed.