The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 2.4 percent in July 2012 to 101.7 from 99.3 in June. The July 2012 PHSI was 12.4 percent higher than the same period a year ago. The PHSI is at its highest level since April 2010 when the home buyer tax credit was about to expire.
The National Association of Realtors (NAR) reported that the July PHSI was up in all regions but the West. The year-over-year increases were 13.4 percent in the Northeast, 20.2 percent in the Midwest, 15.6 percent in the South and 1.3 percent in the West. July new home sales also declined slightly in the West from the previous month.
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 will likely happen to existing home sales when the contracts close in coming months. We anticipate that the August and September existing sales data will reflect today’s pending sales report.