A National Association of Realtors gauge of pending home sales fell 11.4 percent in November compared to the same month in 2005, and dropped 0.5 percent compared to October 2006.
Based on contracts signed in November, the Realtor group’s Pending Home Sales Index was 107. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales, the association noted.
The index is based on pending sales of existing homes, and a sale is listed as pending when the contract has been signed and the transaction has not closed. The index is considered a leading indicator for home sales because pending sales are typically finalized within one to two months of signing, according to the Realtor group.
The index is based on a large national sample that typically represents about 20 percent of all existing-home sales transactions.
“The decline from year-ago levels has been steadily narrowing since July, which was 16 percent lower than the same month in 2005,” the report states.
David Lereah, NAR’s chief economist, said in a statement, “The index is pointing toward fairly stable home sales in the near future. That is another indicator that home sales likely bottomed-out in September.”
He added, “Although some monthly declines are possible, when we look at the forecast for existing-home sales in 2007 on a quarterly basis, we see gradual improvement over the course of the year. That will support future price appreciation as inventories are drawn down.”
Regionally, the index increased 4.8 percent in the Midwest to 101.7 and was 11.6 percent below a year ago. The index in the South slipped 1.1 percent to 121.6 and was 8.9 percent below November 2005. The index in the West declined 2.6 percent to 106.6 and was 15.9 percent lower than a year earlier. In the Northeast, the index was down 2.8 percent in November to 85.5 and was 9.6 percent below November 2005.