US pending home sales rise in March, market said to have turned

26 April 2012 20:59  [Source: ICIS news]

WASHINGTON (ICIS)--US pending home sales rose by 4.1% in March from February, the National Association of Realtors (NAR) reported on Thursday, saying the data indicate that “the housing market has clearly turned the corner”.

The association said that its pending home sales index (PHSI) rose to 101.4 in March compared with the upwardly revised reading of 97.4 seen in February.

The real estate trade group pointed out that the March measure also is well ahead of the same month last year when it was 89.9.

A residential property sale is listed as “pending” when a contract has been signed but the transaction has not been closed and funded with a mortgage loan. A pending sale usually closes within a month or two of contract signing.

The association's pending sales index is seen as a reliable, forward-looking indicator for near-term expectations in the US housing sector.

The index is measured against the 100 baseline set by the NAR in 2001 to represent an average or healthy pace of pending home sales contracts.

NAR chief economist Lawrence Yun noted that the index is now at its highest level since April 2010 when it was 111.3.

Yun said the pending sales index and other housing data indicate that “2012 is expected to be a year of recovery for housing”.

“First-quarter sales closings were the highest first quarter sales in five years,” he said. “The latest contract signing activity suggests the second quarter will be equally good.”

“The housing market has clearly turned the corner,” Yun said. “Rising sales are bringing down inventory and creating much more balanced conditions around the country, which means home prices will be rising in more areas as the year progresses.”

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres, among many others.

The improving sales data from NAR followed a prediction on Wednesday by the National Association of Home Builders (NAHB) that housing construction would begin a recovery this year and gain momentum into 2013.

The two trade groups said that recent negative news about the housing sector – including declines in new and existing home sales and a downturn in home builder confidence – are momentary dips and not a trend.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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