Despite Low Rates, Pending Home Sales Slip In August

Despite the lowest mortgage rates of all-time, home buyers are slowing the pace at which they're buying homes.

According to the National Association of REALTORS®, on a seasonally-adjusted basis, the Pending Home Sales Index fell 1 percent in August.

The Pending Home Sales Index measures homes under contract, but not yet sold, nationwide. In this respect, the Pending Home Sales Index is a forward-looking housing market indicator; a predictor of future home sales.

It's one of the few national indices that "looks ahead" to future market conditions. Most housing data, by contrast, describes past events.

On a regional basis, only the South Region showed improvement in August's Pending Home Sales Index report : 

• Northeast Region: -5.8%
• Midwest Region : -3.7%
• South Region : +2.6%
• West Region : -2.4%

That said, even the value of regional data can be questioned. Like all things in real estate, the number of homes going under contract will vary on the local level.

For example, in the Northeast Region where pending home sales slipped in August, there are close to a dozen states. Some of those states performed better than others, and there is no doubt that cities and towns exist in the region in which pending home sales actually climbed.

As a national/regional report, the Pending Home Sales Index cannot show local market data and, for that reason, it's somewhat irrelevant to everyday buyers and sellers in Marietta. If you're in the market to buy or sell a home today, it's your local housing market data that matters to you. 

We watch the Pending Home Sales Index because it paints a broad picture of housing nationwide. To get local market conditions, though, you'll want to talk with a local real estate professional.

Pending Home Sales Slip In July; Creates Buyer Opportunity

After 3 straight months of gains, the Pending Home Sales Index slipped 1 percent in July. The monthly report is published by the National Association of REALTORS® and measures the number of home under contract to sell nationwide.

The Pending Home Sales Index is closely watched by Wall Street and analysts because it's a forward-looking housing market indicator. Unlike most housing market data, though, Pending Home Sales forecasts a future housing market event. In this case, the Existing Home Sales report.

In its methodology, the Pending Home Sales Index states that 80% of homes under contract close within 2 months, with most of the remaining home going to closing within Months 3 and 4.

We would expect home sales data to taper into the fall buying season, but this year, they may taper more than normal. This is because, in a separate report, the National Association of REALTORS® said that contract cancellation rates are running high.

As compared to a 4 percent contract cancellation rate in May 2011, June and July both registered 16 percent. This means that fewer homes tallied as part of July's Pending Home Sales Index will show up as "closed sales" this fall.

Contracts can be canceled for any number of reasons including more stringent mortgage guidelines, appraisals falling short of the purchase price, and changing mortgage loan limits.

For home buyers in Kennesaw , the Pending Home Sales Index may represent an opportunity. Not only are fewer homes going under contract nationwide, but with cancellation rates spiking, sellers may be more willing to "make a deal".

Note, though, like all real estate, the pace at which homes go under contract is a "local" statistic; you can't assume national data applies to all markets equally. Your home market, for example, may out-perform -- or under-perform -- the national average.

For a closer look at what's happening on your street including the speed at which homes are selling, talk to a local real estate agent.

Pending Home Sales Rise For 3rd Straight Month

Buyers are writing contracts at a furious pace nationwide.

On a seasonally-adjusted basis, the Pending Home Sales Index rose 2 percent last month to reach its highest level since March.

A "pending home sale" is a home under contract to sell, but not yet closed. 

The forward-looking Pending Home Sales Index is up 11 percent from its low of the year, according to the National Association of REALTORS®, and well ahead of its rolling 6-month average.

Unfortunately, national data isn't always helpful for buyers and sellers in Kennesaw and nationwide. To help make data more relevant, therefore, the official Pending Home Sales Index report includes a region-by-region breakdown. 

Between May and June 2011, results were mixed:

• Northeast Region: -0.4%
• Midwest Region : -3.7%
• South Region : +4.4%
• West Region : +6.4%

However, even the value of regional data may be dubious.

The West Region, for example, which showed big gains in June, is comprised of multiple states containing thousands of cities and towns. Some of those areas outperformed the region, and some of them underperformed. The Pending Home Sales Index doesn't show which towns did which. It can't.

For everyday buyers and sellers in BrookStone , it's the local data that matters.

The Pending Home Sales Index shows that more contracts were written in June than in April or May -- a good sign for housing overall. And because 80% of all contracts close within 60 days, we can expect the summer's home resale activity to be high.

This leads home prices higher.

With mortgage rates low and home sales spiking, now may be the best time to buy a home in 2011. Home prices appear to be rising and mortgage rates should, too.

Pending Home Sales Unexpectedly Spike In May

The summer housing market is heating up.

According to data from the National Association of REALTORS®, the Pending Home Sales Index smashed analyst expectations, jumping 8 percent on a monthly basis in May. 

Wall Street calls were for an increase of just 0.5 percent. 

It was a surprise result that, coupled with the recent stronger-than-expected New Home Sales and Existing Home Sales readings, has sparked housing market optimism in Georgia and nationwide.

The biggest reason for the optimism is because of what the Pending Home Sales Index measures. 

In contrast to "traditional" housing data which reports on how housing performed two months ago, for example, the Pending Home Sales Index is a forward-looking indicator; a predictor of future market activity based on freshly-written contracts between buyers and sellers.

In other words, the Pending Home Sales Index looks ahead -- not back. This is reflected in its methodology which states that 80% of homes under contract close within 2 months, and a large percentage of the rest close within Months 3 and 4.

Because May's Pending Home Sales Index rose sharply, therefore, we can expect similar jumps in the Existing Home Sales figures of June and July.

For housing and home prices, this is a positive but the gains won't apply to each home equally. The Pending Home Sales Index is still a national report for a market built on local sales. What's happening on your particular street in your particular neighborhood may not reflect what's happening somewhere else.

For accurate, real-time data in your local market, ask a real estate agent for statistics.