From National Association of Realtors Research Update, Monday, January 14, 2008
Market Conditions
This week's release shows that over the next few months, existing-home sales are expected to hold fairly steady, then rise later in the year and continue to improve in 2009. Lawrence Yun, NAR chief economist, said there is a pull and tug exerting itself on the market, making the exact timing and strength of a home sales recovery uncertain. “On the one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sales decline,” he said. “On the other, consumers continue to wait for additional signs of market stabilization. There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase. A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.”
** The Pending Home Sales Index is 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.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.
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