The Pending Home Sales Index is a leading indicator for the housing market as published by the National Association of Realtors. According to the NAR, based on contracts signed in July, the index is down 7 percent to 105.6. In June the index was at 113.5. For the year, it is down 16 percent from its 2005 levels.
The NAR computes the index by examining pending sales of existing homes. A pending sale is when the contract has been signed but the transaction has not closed.
The NAR has used the index since 2001. Using that year as a benchmark, an index of 100 is equal to 2001’s average level of contract activity.
David Lereah, NAR’s chief economist, had this to say about the index:
“We’ve never seen a general decline in the housing market against a healthy economic backdrop where jobs are being created, the economy is growing and interest rates are favorable,” he said. “Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy. Contributing to this hesitancy is a lot of negative news stories, but in the end we believe that underlying market fundamentals will prevail.”
The results for August are being calculated today (September 7) and are scheduled for release September 25.