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Economy in Brief

U.S. Pending Home Sales Rise To Their Highest Level Since September
by Tom Moeller June 2, 2009

The National Association of Realtors reported that pending sales of existing homes during April rose for the third consecutive month. The 6.7% m/m rise was to the highest level since last September and doubled the unrevised 3.2% March gain. Consensus expectations had been for a slight 0.5% increase in April sales.

Last month's gain in home sales was spread across the country except in the South where they fell slightly from March (+3.6% y/y). In the West (-3.0%y/y) sales recovered a piece of March's decline but remained down sharply from the highs of last summer. Elsewhere, sales in the Northeast jumped by nearly one-third from the March level but they were roughly unchanged from one year earlier. Sales in the Midwest jumped 9.8% from March and have rebounded 11.1% versus 2008.

The home sales figures are analogous to the new home sales data from the Commerce Department in that they measure existing home sales when the sales contract is signed, not at the time the sale is closed. The series dates back to 2001.

The latest monthly gains in home sales have been accompanied by a rise in home prices. The median sales price of an existing home increased a slight 0.2% in April (-15.4% y/y). The rise followed firm increases during the prior two months. The latest gains in home prices did lower housing affordability slightly but just slightly. Therefore, combined with lower interest rates, the affordability index of a home remained up by 29.2% year-to-year and by three quarters from the 2006 low. The latest level was a record high for the series which extends back to 1970.

As the Spring selling season began, the Realtors Association indicated in an earlier report that the number of homes on the market and available for sale rose 8.8% during April but were down 12.8% versus one year earlier. At the current sales rate there was a 10.2 months' supply of homes on the market and there was a 10.4 months' supply during all of last year, up from the 8.9 months supply during 2007 and 6.5 months during 2006. For single family homes, there was a 9.6 months' supply in April versus a full-year figure of 10.0 months during 2008.

The pending home sales data are available in Haver's PREALTOR database. The number of homes on the market and prices are in the REALTOR database.

Pending Home Sales (2001=100)  April March Y/Y 2008 2007 2006 
Total 90.3 84.6    3.2% 86.8 95.8 112.1 
  Northeast 78.9 59.5 0.8 72.6 85.6 98.5
  Midwest 90.4 82.3 11.1 80.6 89.5 102.0
  South 93.0 93.2 3.6 89.8 107.3 127.3
  West 94.8 93.1 -3.0 99.3 92.1 109.5
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