Pending home sales declined 4.1 percent in January following a strong upturn in December because of unfavorable weather patterns, according to the NATIONAL ASSOCIATION OF REALTORSÂ®.
The Pending Home Sales Index, a leading indicator for the housing sector based on contracts signed in January, fell to an index of 108.7 from an upwardly revised reading of 112.3 in December, and is 8.9 percent lower than January 2006.
Aside from December, which got a lift from mild weather, the January index was the highest since last August. More There has been a narrowing trend from year-ago levels since last July when the index was 14.7 percent lower than a year earlier.
â€œWeâ€™re seeing temporary near-term weather disruptions in much of the country, but there is an underlying pattern of stabilization in the housing market,â€ says David Lereah, NARâ€™s chief economist. â€œAs a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely.â€
As reported last month, the PHSI for December got a boost from mild weather and showed the largest monthly gain in nearly three years. Decemberâ€™s index rose 4.5 percent, the largest increase since a 6.1 percent jump in March 2004.
The PHSI in the Northeast jumped 9.3 percent in January to 101.8 but was down 1.3 percent from a year ago. The index in the West rose 0.2 percent to 110.8 but was 7 percent below January 2006. In the Midwest, the index declined 2.4 percent in January to 100.1, 10.8 percent lower than a year earlier. The index in the South fell 11.7 percent to 116.7, a drop of 11.8 percent from January 2006.
The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending sales typically are finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons.
Reprinted from REALTORÂ® Magazine Online March 6, 2007 with permission of the NATIONAL ASSOCIATION OF REALTORSÂ®. Copyright 2007. All rights reserved.
Bennington VT, Buying, Selling, Press Release