The National Association of Realtors announced yesterday that pending sales of existing homes rose in August to 93.4, up from 87.0 in July. That’s a 7.4 percent increase month to month and it’s up 8.8 percent over August 2007.
The index is at its highest level since June 2007, when it was at 101.4, according to NAR.
California, Nevada, Arizona, Florida, Rhode Island, and Washington, D.C., led the pending home sales numbers.
NAR chief economist Lawrence Yun notes the unusual timing of contract activity in August. “Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” he said. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.”
Here’s some more information about the index:
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.
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.
October 9, 2009