The Pending Home Sales Index, a new leading indicator for the housing market, shows home sales are firming, according to the National Association of Realtors®.

The Pending Home Sales Index,* based on data collected for February, stands at 123.2, which was 2.2 percent above January and 10.4 percent above February 2004. The index is based on pending sales of existing homes, including single-family and condos. A home sale is pending when the contract has been signed but the transaction has not closed. Pending sales typically close within one or two months of signing.

David Lereah, NAR's chief economist, said sales are looking strong for March and April. "Although home sales eased in February, housing activity appears to be firming with a modest uptrend in the months ahead," he said. Data for March existing-home sales will be released April 25.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. Coincidentally, 2001 was the first of four consecutive record years for existing-home sales. 2001 sales are fairly close to the higher level of home sales expected in the coming decade relative to the norms experienced in the mid-1990s. As such, an index of 100 coincides with a historically high level of home sales activity.

Regionally, the PHSI in the Midwest rose 6.7 percent to 121.1 in February, and was 9.4 percent above a year earlier. In the South, the index of 127.6 increased 3.5 percent from January and was 10.5 percent higher than February 2004. The index in the Northeast improved by 2.4 percent in February to 108.4, and was 3.0 percent above a year ago. In the West, the index fell 4.0 percent to 129.9 in February, but was 16.8 percent above February 2004.

The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Published: April 5, 2005