US pending home sales rise in April, continuing slow recovery

30 May 2013 18:44  [Source: ICIS news]

WASHINGTON (ICIS)--US pending home sales rose slightly in April from May, the National Association of Realtors (NAR) said on Thursday, indicating that the nation’s housing market continues to “squeak out gains” in a continuing if slow recovery.

In its monthly pending home sales index (PHSI), the association said that the gauge of residential property transactions rose by 0.3% in April to 106 from the May measure of 105.7.

Although the monthly gain was razor-thin, NAR noted that April’s index level of 106 is more than 10% ahead of the same month in 2012 when it was 96.1.

In addition, said NAR chief economist Lawrence Yun, pending sales have been above year-ago levels for the past 24 months.

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 a 100 baseline set by the NAR in 2001 to represent an average or healthy pace of pending home sales contracts.

“The housing market continues to squeak out gains from already very positive conditions,” Yun said.  He said the trend in pending home sales so far this year indicates that 2013 will easily deliver more sales than in 2012.

“Total existing home sales are expected to rise just over 7% to about 5m this year,” Yun said.

That would put full-year 2013 home sales within the normal pre-recession range of 5m to 5.5m existing residential property sales.

Existing home sales have not been above 5m units annually since 2007 when they were at 5.6m for the year.  The 2008-2009 Great Recession began in December 2007.

Sales of existing homes reached 5.1m in 2009, but that was an anomaly, driven by a year-long federal tax credit programme for home buyers that artificially stimulated the market.  Sales slumped to below 5m annually once the federal stimulus deal expired.

Existing home sales peaked at slightly more than 7m units in 2005 when the housing boom was at its peak.

The US housing sector, especially new home construction, is a key downstream consumer industry for chemicals and resins.

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

By: Joe Kamalick
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