Pending home sales in the western US fell in May by 14.9 percent year over year, according to new pending home sales data released yesterday by the National Association of Realtors. According to the press release:
Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
The pending home sales index for the western region of the US, which includes Colorado, rose to 104.9 from 91.3, while the national index rose 15.5 percent from 89.0 to 102.8 year over year.
All regions of the country showed gains in pending home sales, year over year. The rise from May 2010 to May 2011 reflects the drop off in new pending home sales that followed the end of the homebuyer tax credit in April 2010. Homes needed to be under contract by April 2010 to be eligible for the tax credit. New properties under contract fell after April, so year-over-year comparisons with May 2010 and June 2010 are likely to show gains.
Month to month, the pending home sales index rose 19.7 percent in the West and 5 percent nationally. This was expected as home buying tends to increase from April to May.
The West showed the second-smallest increase in the index among all regions. the Midwest showed the biggest gains with a year-over-year increase of 20.7 percent.
Pending home sales help us predict future closings, so this news suggests that closings in June and July may be stronger both month over month and year over year.
Closings have been rather weak in Colorado so far this year. Comparing to 2010 is of limited value due to the tax credit-driven run-up in closings, but compared to both 2009 and 2008, total closings in 2011 are either flat or down. According to the CAR data (seen here) there have been 21,262 closings through May in 2011. During the same period of 2009, there were 21,152 and during 2008 there were 26,586. There were 23,461 during the same period of 2010. So far, 2011 is about even with 2009, which was a weak year.