The NAR’s Pending Home Sales Index (PHSI) is showing yet another sign of strength in the housing market. Recent data is showing that pending sales (home sales with a signed contract but have not closed) reached the highest level in 19 months during November. The index showed that contract signings increased 7.3 percent to 100.1 in November.
The last time the index was higher than 100.1 was in April 2010 when it reached 111.5. This prior record was fueled by buyers that were rising to meet the deadline for the home buyer tax credit that was expiring.
About the Pending Home Sales Index
Pending Home Sales Index (PHSI) is released during the first week of each month. It is designed to be a leading indicator of housing activity.
The index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.
How This Affects Potential Home Buyers
There have been some signs in the past month that housing may have put in its bottom. If this turns out to be the case, potential home buyers that are sitting on the sidelines may do better to purchase their home sooner rather than later. Once there is strong confirmation that a bottom has been reached, it is very likely that even more buyers will rush into the market (some Realtors are already reporting the lowest housing inventories in years) which will push housing prices higher very quickly.
Before You Shop: Get Pre-Qualified
The first step in shopping for your new home is understanding how much home you can afford. This prevents you from falling in love with a home that is not an option. Getting pre-qualified means you know what your budget is, which means you can save time and money only looking for homes that are truly a fit for you. Getting pre-qualified is free and only a phone call away, please don’t hesitate if you have any questions.