The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. As such, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale. Why Investors Care
| Released on 5/7/08 For Mar 2008 | |||||||||||||||||||||
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Highlights
Home sales at best look to be extending 20 percent year-on-year declines, according to the latest pending home sales index that offers no indication of improvement for the housing sector. The index, which offers a look at future home sales, fell 1.0 percent in March to 83.0 for a 20.1 percent year-on-year decline, no improvement from trend and compared with a 19.3 percent year-on-year decline for existing home sales in the month. New home sales showed a staggering 37 percent year-on-year decline in March.
The only good news in the report was strength in the Northeast, up 12.5 percent in the month and a region that continues to show some signs of life in housing data. Still, the year-on-year decline for the region is 15.4 percent. Weakness in the report is centered in the Midwest, a region that Federal Reserve Governor Kroszner pointed to just this morning where mortgage delinquencies are a special problem. Foreclosures are adding to supply on the market and pushing home prices lower.
The National Association of Home Builders, which compiles the pending home sales report, said restrictive practices by lenders are adding to troubles for the home sector. The dollar and stocks slipped slightly in reaction to the report which points to more trouble for home sales, with the next reports out at month end. The housing market index, which tracks sentiment among builders, is out next Thursday.
The pending home sales index has not yet given signs of hope for a turnaround in housing. In fact, the latest reading pointed in the other direction. The pending existing-home sales index fell 1.9 percent in February to 84.6. The year-on-year rate slipped to minus 21.4 percent in February, pointing toward continued weakness in existing home sales.
Pending home sales Consensus Forecast for March 08: 83.8
Range: 82.8 to 85.0
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