The last Pending Home Sales Index from the National Association of Realtors (NAR) showed a substantial 10.4% month-over-month increase. According to NAR the index measures:
housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.
This increase confirms a growing feeling that demand for housing has begun to increase.
Both NAR and Fannie Mae expect an increase in sales over the upcoming five quarters.
Bottom Line
Sales will increase over the next several quarters. The increase will initiate a housing recovery. However, price increases will not take place until current inventory levels diminish. That could take 12-18 months.
