Yesterday, the National Association of Realtors released its August “Pending Home Sales” report which showed that nationally, pending home sales had edged up 4.3% as compared to July. The National Association of Realtors developed the “Pending Home Sales” index as a leading indicator based on a random sampling of roughly 20% of the month’s transactions for exiting home sales and indexed to the average level of contract activity set during 2001.
In an effort to use any “positive” numbers as a means of reassuring hesitant buyers, David Lereah, NAR’s Chief Economist states in a release titled “Pending Home Sales Index Shows Market Stabilizing”, “Our sense is that home sales may have reached a low in August – the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible”
As usual, looking more closely at the results one might draw a less optimistic conclusion:
- Nationally the index was down 14.1% as compared to August 2005
- The Northeast region was down 12.4% as compared to August 2005.
Additionally, August marks the third consecutive month that this region has registered activity BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.
- The West region was down 16.9% as compared to August 2005.
- The Midwest region was down a whopping 20.4% as compared to August 2005.
Additionally, August marks the second consecutive month that this region has registered activity BELOW the average activity recorded in 2001, the first year Pending Home Sales were tracked.
- The South region was down 9.4% as compared to August 2005.
So it appears that, year over year, contract activity is dropping rather sharply with the Midwest and the West regions now showing significant declines.
So much for pending contracts pointing to further “market stabilization”.
