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Pending Home Sales Rise As Prices Keep Falling
March 29 Pending home sales rose in February, but with significant regional differences, according to the latest data from the National Association of Realtors (NAR).
The Pending Home Sales Index rose 2.1% to 90.8 in February, up from 88.9 in January. The Index remains 8.2% below the level of one year ago. Considered a leading economic indicator, the Index reflects contracts, not closings, which normally take place in one to two months.
The Index for the Northeast fell 10.9% in the period and is 18.4% below the same month last year. Some of the poor performance in the Northeast is likely to be weather-related. In the Midwest the Index rose 4%, in the South 2.7% and in the West 7%. Only in the West is the Index higher than a year ago, by 0.6%.
Lawrence Yun, NAR chief economist, said it is important to focus on the long-term trend, rather than month-to-month changes.
"Month-to-month movements can be instructive, but in this uneven recovery it's important to look at the longer term performance," Yun said. "Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20% above the low point immediately following expiration of the home buyer tax credit."
Meanwhile, house prices in metro areas across the U.S. continued to fall, based on January figures, the most recent available from the S&P/Case-Shiller Home Price Indices.
Home prices in 13 of 20 MSA's measured and the 10-city and 20-city composites all showed a deceleration in the annual growth rate in January, compared to December 2010. San Diego and Washington DC were the only two markets to record positive year-over-year changes, said t news release.
None of this bodes well for the housing industry in the near term, according to David M. Blitzer, chairman of the index committee at Standard & Poor's.
"Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future," Blitzer says. "With this month's data, we find the same 11 MSA's posting new recent index lows. The 10-city and 20-city composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.
"These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery," he adds.
Read the National Association of Realtors news release here.
Read the S&P Case-Shiller news release.