A National Association of Realtors index that gauges pending home sales increased in June for the second straight month but is down 9.6 percent compared to June 2005.
The Pending Home Sales Index, based on contracts signed in June, increased 0.4 percent since May to 113.9 from an upwardly revised level of 113.5 in May, but is 9.6 percent below June 2005, the trade group reported.
The index is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.
An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.
Regionally, the index in the South rose 2.5 percent in June to 130.7 but was 4.8 percent below June 2005. The index in the Midwest increased 1.9 percent to 103.3 in June but was 11.9 percent below a year ago. The index in the West was unchanged, holding at 110.1 in June, and was 14.2 percent lower than June 2005. In the Northeast, the index dropped 6.3 percent in June to 99.4 and was 11.6 percent below a year ago.
The Pending Home Sales Index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales, according to an association announcement. In developing the model for the index, the Realtor group demonstrated that the level of monthly sales-contract activity from 2001 through 2004 closely parallels the level of closed existing-home sales in the following two months.
David Lereah, NAR’s chief economist, said the small rise in the index is good news.
“Once again, we have various housing indicators moving in different directions, which itself is an indicator of a market in transition,” he said in a statement. “The housing market is striving for balance — a process that will take several months.”