How the Pending Home Sales Index Aids Market Reports

How the Pending Home Sales Index Aids Market ReportsThere are a few reports that drive our real estate research. Many rely on one report that the National Association of Realtors (NAR) puts out - the Existing Home Sales Report. This report quantifies the number of closed sales for single-family homes, townhomes, condominiums, and co-ops.

However, there is yet another report that is released every month which could be more important - the Pending Home Sales Report.

This report reveals what is known as the Pending Home Sales Index (PHSI) which is, according to the NAR, "[...] a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing."

Generally, the PHSI leads the Existing Home Sales Report by a month or more. This makes it a more current source of market information, especially in terms of home sales.

How the PHSI was Developed and is Now Calculated

According to the NAR, the PHSI is calculated in terms of 100 - equal to the average level of contact activity during 2001 (the first year to be examined).

The volume of existing-home sales in 2001 fell between 5.0 to 5.5 million, which is considered normal for the current population of the US.

The General State of the PHSI

The most recent report notes that the PHSI climbed 3.3% to 105.9 in July, up from 102.5 in June.

The index is now at its highest level since August 2013 (107.1) and is above 100 - which is the average level of contract activity - for the third month in a row. 

Region by Region PHSI

NORTHEAST

(includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont)

The PHSI jumped 6.2% to 89.2% in July. It is 8.3% above a year ago.

MIDWEST

(includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, North Dakota, Nebraska, South Dakota, and Wisconsin)

The PHSI in the midwest fell 0.4% to 104.6 in July. It is 6.4% below a year ago.

SOUTH

(includes Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia)

The PHSI in the South increased 4.2% to 119.0 in July. It is 1.0% below a year ago.

WEST

(includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming)

The PHSI in the West increased 4.0% to 99.5 in July. It is 6.0% below a year ago.

How do these figures apply to you? Don't hesitate to send us an email or give us a call. We'll be happy to help!

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