The Pending Home Sales Index, a forward-looking indicator based on signed contracts, increased 1.7% in November 2012 to 106.4, up from the downwardly revised 104.6 in October. The November 2012 PHSI was 9.8% higher than the same period a year ago, and reached the highest level since April 2010 when the home buyer tax credit was expiring.
Regionally, the National Association of Realtors (NAR) reported mixed results for the November 2012 PHSI. The Northeast and West showed the most improvement, with respective monthly increases of 5.2% and 4.2%. The Midwest was up 0.1% in November and the South was unchanged from the previous month. Compared to a year ago, the Northeast and Midwest were both up 15.2%, and the South was up 13.9%. The November 2012 PHSI in the West was down 3.2% from the same period a year ago.
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 December 2012 and January 2013 existing sales data will reflect today’s pending sales report, suggesting that existing home sales are likely to rise as we move to 2013.