Monday, October 02, 2006

NAR: Pending Home Sales Index Shows Market Stabilizing

10/2/2006 10:54:00 AM

To: National Desk

Contact: Walter Molony of the National Association of
Realtors, 202-383-1177,

WASHINGTON, Oct. 2 /U.S. Newswire/ -- Pending home
sales are up, indicating a stabilization is taking
place in the housing market, according to the National
Association of Realtors (r).

The Pending Home Sales Index,( see note 1 below) based
on contracts signed in August, rose 4.3 percent to a
level of 110.1 from a reading of 105.6 in July, but is
14.1 percent lower than August 2005.

David Lereah, NAR's chief economist, said the rise in
the index is a hopeful sign. "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," he said. "With fewer new
listings coming on the market, we should be able to
draw down the inventory supply early next year to the
point where home prices will rise, but at a slower
pace than historic norms."

The 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 and the transaction has not closed, but the
sale usually is finalized within one or two months of

An index of 100 is equal to the average level of
contract activity during 2001, the first year to be
examined, and was the first of five consecutive record
years for existing-home sales. There is a closer
relationship between annual changes in the index and
actual market performance than with month-to-month
comparisons; analysis shows a strong parallel between
changes in the index from a year ago and the actual
pace of home sales in coming months.


Regionally, the PHSI in the West rose 9.2 percent in
August to 112.7 but was 16.9 percent below August
2005. The index in the South increased 4.0 percent to
126.8 in August but was 9.4 percent below a year ago.
In the Northeast, the index rose 3.6 percent in August
to 95.4 but was 12.4 percent below August 2005. The
index in the Midwest was unchanged at 93.8 in August
and was 20.4 percent lower than a year ago.

The National Association of Realtors (r), "The Voice
for Real Estate," is America's largest trade
association, representing more than 1.3 million
members involved in all aspects of the residential and
commercial real estate industries.


(1) The Pending Home Sales 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 parallel between annual
index changes (from the same month a year earlier) and
year-ago changes in sales performance than there is
with month-to-month comparisons.

The forecast will be revised Oct. 11, and
existing-home sales for September will be released
Oct. 25. The next Pending Home Sales Index will be on
Nov. 1.

Information about NAR is available at This and other news releases
are posted in the News Media section. Statistical
data, charts and surveys also may be found by clicking
on Research.


/© 2006 U.S. Newswire 202-347-2770/


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