US pending home sales rise 5.9% in May, reversing April’s dive

27 June 2012 16:52  [Source: ICIS news]

WASHINGTON (ICIS)--US pending home sales rose by 5.9% in May from April, real estate officials said on Wednesday, reversing the sharp 5.5% drop in April and reviving hopes that the long-suffering US housing market is beginning to recover.

The National Association of Realtors (NAR) said that its pending home sales index (PHSI) rose to 101.1 in May from the 95.5 measure seen in April, returning the index to the same level it held in March.

The May upturn in pending home sales came as a relief to housing market stakeholders and suppliers. The 5.5% drop in April had rattled US stock markets and ended what had been a more or less steady improvement in the index since May of last year, when it was at 89.2.

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.

The NAR also noted that month-to-month gains in pending home sales over the last 12 months are running well ahead of the year-ago 12-month period, saying that those year-on-year changes are more significant and bode well for the housing sector.

“The housing market is clearly superior this year compared with the past four years,” said NAR chief economist Lawrence Yun.

“The latest increase in home contract signings marks 13 consecutive months of year-over-year gains,” he said.

“Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9% to 10% improvement in total sales for 2012,” he added.

The health of the US housing industry is important to the nation’s chemicals and plastics producers because the sector – especially new home construction – is a key downstream consuming market.

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

By: Joe Kamalick
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