The Pending Home Sales Index (PHSI) rose a disappointing 0.3 percent to 106.0 in April, the ""National Association of Realtors (NAR)"":http://www.realtor.org/news-releases/2013/05/pending-home-sales-edge-up-in-april reported Thursday. Economists had expected a 1.4 percent increase to 107.5 from March. The March index was unchanged from the originally reported 105.7.[IMAGE]
Last week in a parallel report, the Census Bureau and HUD reported contracts for the ""sale of new homes"":http://www.census.gov/construction/nrs/pdf/newressales_201304.pdf increased 2.3 percent to 454,000 in April.
Both the new homes sales and the pending home sales reports measure contract signings and are designed to be forward looking indicators.
With the month-over-month improvement, the PHSI is 10.3 percent above April 2012, the strongest year-over-year gain since October when the PHSI was up 12.1 percent from a year earlier.
The index has improved month-over-month in three of the last four months.
Though designed to be an indicator of future sales-closings, the PHSI does not always line up with the existing-home sales report of completed transactions issued by the NAR.
In March, existing-home sales ""dropped"":http://dsnews.comarticles/existing-home-sales-prices-jump-to-multi-year-highs-2013-05-22 to 4.94 million from 4.95 million in February even though the PHSI rose in January. Closed transactions rose in both January and February although the pending sales index dropped in November and December.
NAR Chief Economist Lawrence Yun continued to blame tight inventories for the slow moving sales pace.
""The housing market continues to squeak out gains from already very positive conditions,"" Yun said. ""Pending contracts so far this year easily correspond to higher closed home sales in 2013,"" he said. ""Total existing-home sales are expected to rise just over 7 percent to about 5 million this year. Because of inventory shortages, higher home sales will push up home values to the highest level in five years.""
While the month-over-month sales pace does not line up with the pending sales index, it does match the movement in the median price of an existing home. In the last 12 months, the median price and home sales volume have moved in opposite directions (prices up with volume or vice versa) seven times.
The improvement in the index was driven by a sharp gain in the Northeast where the PHSI jumped 11.5 percent to 92.3 in April and is 17.7 percent above a year ago. In the Midwest, the index rose 3.2 percent to 107.1 in April and is 15.1 percent higher than April 2012. Pending home sales in the South slipped 1.1 percent to an index of 119.2 in April but are 12.3 percent above a year ago. The index in the West fell 7.6 percent in April to 94.6 and is 2.6 percent below April 2012.
The PHSI is based on a large national sample, representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am EST_