Pending Home Sales Retreats

 

With existing home sales typically lagging the PHSI by one to two months, the PHSI signals to a decline in existing home sales by November.
Courtesy of NAHB

Pending homes sales retreated in September, following solid gains in July and August. The National Association of Realtors (NAR) announced a 1.8 percent decline in the Pending Home Sales Index (PHSI) in September, following growth of 4.4 percent in August and 4.5 percent in July.

Across the regions, the PHSI was down in the Midwest (-5.7 percent), South (-3.5 percent) and Northeast (-1.7 percent), but up in the West (+3.5 percent). Relative to a year ago, PHSI is down sharply (between 19 percent and 33 percent) in all regions. This could be due to a high amount of foreclosed homes, making for a buyers’ market.

NAR suggested the decline in the September PHSI signaled an uneven recovery entering 2011. The foreclosure moratorium could likely cause some disruptions and contribute to an uneven sale performance in the months ahead. There appears to be a pent-up demand that eventually will be unleashed as banks resolve their issues with foreclosures and the labor market improves.

On a positive note, the Bureau of Labor Statistics announced a healthy increase in employment in October, with 151,000 new jobs added, all from increased private employment. The recovery in housing demand depends on an improving employment situation.

October’s jobs growth signals that the outlook for the housing market is improving. Expect the employment situation to improve from here, turning in better numbers through 2011 and 2012, with housing demand following closely behind.

– Courtesy of NAHB