Since Pending Home Sales Index is based on contracts signed, the index typically leads existing home sales by a period of one to two months.???????(R)???????+???????(R)??????oe?EUR??,,????'?????< Courtesy of National Association of Realtors

Following two consecutive months of modest increases, the National Association of Realtors reported a sizable decline in pending home sales during April 2011. Pending Home Sales Index (PHSI) fell to 81.9 in April, an 11.6 percent drop from a downwardly revised 92.6 in March. 

On a year-over-year basis, the PHSI is 26.5 percent below its April 2010 reading, but this is not a good comparison since home buyers were trying to purchase ahead of the federal home buyer tax credit’s contract deadline.

Since bottoming out in mid-2010, the recovery in home sales has been uneven and this latest reading only adds to that characterization. NAR chief economist, Lawrence Yun said, “The magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it’s just a one-month aberration.” 

Indeed, weather might be a key reason behind April’s unexpectedly large decline. This was the 10th wettest April on record and a preliminary total of 875 tornadoes were reported—an all-time high for any month on record. These often-violent weather patterns occurred throughout the South and Midwest and likely had an impact on homebuyer traffic and contract activity last month.

PHSI declined in every region except for the Northeast, where it registered a 1.7 percent increase between March and April. Not surprisingly, the South experienced the largest percentage decline (17.2 percent) in PHSI. The index fell 10.4 percent for the Midwest region and 8.9 percent in the West.

– Courtesy of NAHB