PENDING HOME SALES INDICATE TRANSITIONING MARKET

From CAR Newsline - Wednesday, August 02, 2006

For the second consecutive month, pending home sales have risen on a month-to-month basis, a sign the housing market is beginning to level out, according to a recent report from NAR. In June, the Pending Home Sales Index (PHSI), which gauges home sales activity for upcoming months based on the number of transactions that have signed contracts but are not yet closed, increased 0.4 percent to 113.9 from the reading one month earlier and edged down 9.6 percent from June 2005. An index of 100 or more generally indicates a high level of home sales activity.

"Once again, we have various housing indicators moving in different directions, which itself is an indicator of a market in transition," said NAR Chief Economist David Lereah. "The housing market is striving for balance -- a process that will take several months. A quieting in the movement of indicators should restore confidence to home buyers who've been on the sidelines, waiting for the right time to get into the market, and now is the best time we've seen since the 1990s in terms of housing choices and flexible terms."

The PHSI declined across the nation in June compared with the readings a year ago. On a regional basis, the PHSI was highest in the South, where it edged down 4.8 percent to 130.7. In the West, the index fell 14.2 percent to 110.1. The PHSI also declined in the Midwest and Northeast regions, falling to 103.3 and 99.4, respectively.