The National Association of Realtors (NAR) this morning released its data on pending home sales in August. The index fell from a two-year high of an upwardly revised reading of 101.9 in July to 99.2 during the month. Compared with August of 2011, the pending home sales index rose 10.7%. The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.
The NAR’s chief economist noted:
The performance in month-to-month contract signings has been uneven with ongoing shortages of lower priced inventory in much of the country, and across most price ranges in the West, but activity has remained at notably higher levels this year. The index shows 16 consecutive months of year-over-year increases, and that has translated into a higher number of closed sales. Year-to-date existing-home sales are 9 percent above the same period last year, but sales were relatively flat from 2008 through 2011.
An inventory shortage is constraining market activity in the West, where the index fell 7.2% in August to 102.5, below the year-ago index by 4.2%. Other regions of the country saw pending sales gains of 0.9% in the Northeast, while both the Midwest and the South experienced declines of 2.6% and 1.1%, respectively.
The NAR projects existing home sales to rise 9% in 2012 and another 8% in 2013, while home prices rise by 5% annually in each of the two years.