Pending Homes Sales Index Takes a Hit

Are you living in a risky housing market? What are the ways to tell? One sign of local conditions is the Pending Home Sales Index (PHSI), a system designed by the National Association of Realtors. It’s based on contracts signed per monthh.

According to these ratings, pending sales of existing homes nationwide fell 3.7 percent - to a level of 111.8 - in April. It marked the third consecutive monthly decline of such numbers. 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.

David Lereah, NAR’s chief economist, said various housing and economic indicators have been moving in different directions.

“When some measures are up and others are down, it tells us that we’re in a period of transition. Pending homes sales probably give us the best measure for the overall direction of the housing market, which is falling from historical highs,” he said. “I see this time of adjustment as being a trough in home sales that will more or less level out toward the end of the year. Over time, homeownership remains the best investment a family can make.”

Such an assessment echoes those that believe 2006 will be slow, but still strong, as far as Florida home loans and other mortgages sales are concerned. Regionally, the PHSI in the South rose 1.4 percent in April to 129.4, but was 5.7 percent below April 2005.