The Pending Home Sales Index, a forward-looking index released today by the National Association of Realtors (NAR), fell 4.7 percent to a rating of 84.7 in May, compared with an upwardly revised reading of 88.9 in April.
The index remains 14 percent below last year’s figure of 98.5. A home sale is listed as pending when the contract has been signed but the transaction has not closed.
“The overall decline in contract signings suggests we are not out of the woods by any means,” said Lawrence Yun, chief economist for the NAR, in a statement. Yun went on to promote a housing stimulus bill currently under consideration in the Senate, a legislative measure for which the NAR is lobbying heavily.
Regionally, the Pending Home Sales Index slipped 1.3 percent in the West to 97.5 in May, and the reading was down 2.9 percent to 77 in the Northeast. The index fell 6 percent to 78.6 in the Midwest and 7.1 percent to 84.5 in the South.
“Some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half,” Yun said. “Price conditions vary tremendously, even within a locality, depending upon a neighborhood’s exposure to subprime loans.”
Double-digit pending sales gains in May from a year ago were recorded in Colorado Springs, Colo.; Sacramento, Calif.; and Spartanburg, S.C., according to the trade group.
The NAR also released an optimistic prediction for existing-home sales, which the group expects will rise to an annual pace of 5.75 million in the fourth quarter, compared with a pace of 5.01 million in the second quarter. In 2009, the NAR expects existing-home sales to rise 5 percent compared with 2008.
The aggregate median existing-home price is projected to fall 6.2 percent this year to $205,300, and then rise by 4.3 percent in 2009 to $214,100. The median new home price is projected to decline 3.2 percent to $239,300 this year and then rise 5.3 percent in 2009 to $251,900.
“The speed at which home prices has declined in a few select markets is unprecedented, but the large price declines in those areas have enticed bargain hunters back into the market,” Yun said.
New home sales are expected to fall 32.3 percent to 525,000 in 2008 and decline another 3.4 percent next year to 507,000.
“In light of high inventory conditions, rising commodity prices and construction costs will curtail new home construction deep into 2009,” Yun added.