An index that measures U.S. pending home sales dipped 0.3
percent from February to March but is up 1.7 percent since March 2004, the
National Association of Realtors reported
today.
The Pending
Home Sales Index is based on pending sales of existing homes, including
single-family and condo. A home sale is pending when the contract has been
signed but the transaction has not closed. Pending sales typically close within
one or two months of signing. The index stood at 122.8 in March.
Regionally, the Pending Home Sales Index rose 5.8 percent to
114.7 in March in the Northeast, but was 4.1 percent below March 2004. In the
South, the index increased 1 percent to 128.9 and was 5.3 percent higher than a
year ago. The index in the West edged up 0.6 percent in March to 129.1 and was
10.5 percent above March 2004. In the Midwest, the index fell 6.1 percent from
a surge in February to 113.7 in March, and was 7.5 percent below a year ago.
An index of 100 is equal to the average level of contract
activity during 2001, the first year to be analyzed and the first of four
consecutive record years for existing-home sales. The level of sales in 2001 is
fairly close to the higher level of home sales expected in the coming decade
relative to the norms experienced in the mid-1990s, the association reported,
and an index of 100 coincides with a historically high level of home sales
activity.
The Pending Home Sales Index is based on a large national
sample, representing about 20 percent of transactions for existing-home sales.
In developing the model for the index, it was demonstrated that the level of
monthly sales-contract activity from 2001 through 2004 closely parallels the
level of closed existing-home sales in the following two months.
David Lereah, chief economist for the Realtors association,
said the February and March indices bode well for home sales in April and May. "Considering
we've set records for home sales in each of the last four years, the level of
contract activity is exceptionally strong," he said. "In fact, the March
index is the sixth-highest monthly reading we've ever had for pending home
sales." The report on April existing-home sales will be released May 24.
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