The index reports figures from contracts signed in during the month of May. Numbers from the West and Northeast show increases, while numbers from the Midwest and south decreased. The overall index was at 97.7 in May which reflects a drop from the adjusted level of 101.2 in April. The May index rating of 97.7 is 13.3% lower than the numbers from 2006. At that time the rating was 112.7.
A senior economist for the NAR states that the housing market continues to be effected by tougher lending standards coupled with decreased buyer confidence. He notes that some transactions are interrupted by the current mortgage market disruptions yet believes that tighter lending standards will lead to a stronger, healthier real estate market over the long term.
Currently, mortgage applications are on an upward trend. Some of the increase is due in part to buyers reapplying for alternatives to subprime financing. Yun feels that the market will remain the same during the upcoming months.
Yun believes that as consumer confidence increases, so will home sales.
Here are nationwide results of the most recent Pending Home Sales Index:
West: Increased 5.6% in May to 95.4, however is 13.7% below 2006.
Northeast: Increased 3.8% from April up to 93.1, however is 9.6% lower than May 2006.
South: Dropped 8.9% during May to 107.2 and was 15.4% lower than 2006.
Midwest: Fell 8.9% in May to 89.4 and was 11.7% under May 2006.
The PHSI is a leading indicator for the housing sector. Information is based on the pending sales of existing homes. Index levels of 100 are equal to the average level of contract activity during 2001. 2001 was the first year to be examined as well as the very first of 5 consecutive record-setting years for the sales of existing homes.
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