Future Indicator of Housing Market, Not Current
The National Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels. Are you surprised?
Just for reference, a “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.
The Pending Home Sales Index (PHSI) is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors.
June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer in Ankeny, the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.
More Good News for Today’s Buyers:
- Home supplies are up, which creates competition among sellers
- Builder confidence is down, which leads to “free” upgrades and incentives
- Mortgage rates are low, which increases cash flow and disposable income
All things equal, the current home buying conditions haven’t been this favorable in years. Seriously. It’s a great time to buy a home. Just not a fantastic time to sell.
The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.
If you’re planning to buy a home later this year, consider moving up your time frame.
It’s an excellent time to be a buyer in Des Moines. If you need to get pre-approved, feel free to contact me. If you just need a Realtor to help you find the home of your dreams, I can definitely connect you with someone you can trust. All of my contact information is below this post.
