Monday, June 4, 2007

Pending Home Sales Index drops

The National Association of Realtors (NAR) announced that its Pending Home Sales Index dropped 3.2% in April from a month earlier. The index measures home purchases in which the contract has been signed but the transaction is not yet closed. It is considered a forward-looking indicator of market activity. In both March and April, the pending home index was approximately 10% lower than last year’s readings.

This drop is somewhat unexpected, because forecasts predicted a 0.4% increase. Lawrence Yun, a senior economist with the NAR, said sales of existing homes “might ease but should be fairly stable in the months ahead”. Hm… The index was in fact much lower than expected, is that a sign of improvement? Not in the real world, I think. According to some predictions, it may take several years for the housing market to stabilize, so expecting a “quick rebound” in the coming months is somewhat unrealistic. A rosy picture from the NAR again? Perhaps…

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