NAR: Year-over-year jump is highest in Midwest

By Inman News, Wednesday, November 30, 2011

Pending sales of U.S. existing homes jumped 10.4 percent in October, according to an index released today by the National Association of Realtors.

The monthly increase in NAR’s Pending Home Sales Index is the largest since an October-to-November jump last year, and continues a recent trend in the index’s gradual rise for the year.

October’s 93.3 index rating represents a jump of 9.2 percent compared to October 2010, with all U.S. regions climbing on a year-over-year basis.

The NAR index report, updated monthly, also shows that all U.S. regions but the West experienced significant bumps in contracted home sales in October, including a 24.1 percent monthly jump for the Midwest, to 88.7. In the West, the index dropped 0.3 percent to 105.5; however, the region still has the highest index rating, a position it has maintained for the last year, except for March and April 2011.

All four regions showed year-over-year growth in October, with the Midwest showing the greatest jump, up 13.2 percent.

NAR’s Pending Home Sales Index is built from a national sample representing about 20 percent of signed, but not yet closed, contracts for existing-home sales. The index is built off the observation that signed contracts track closely with actual closed contracts.

The index is built on data dating back to 2001, a robust year for existing-home sales, and an index of 100 represents the average contract activity for that year.

The Northeast experienced a 17.7 percent month-over-month increase in October to 71.3, up from an annual low of 60.6 in September. The region’s index rose 3.4 percent, from 69 at the same time last year.

The South’s index grew 8.6 percent in October, to 99.5, up 9.7 percent over last year’s measure.

The West, the lone region to experience a monthly drop (down 0.3 percent), settled at 105.5, which still represents an 8.1 percent growth on a year-over-year basis.

Also today, NAR released its December 2011 U.S. economic forecast, which largely mirrors its previous forecast, released in November. NAR’s forecasted 2011 U.S. real gross domestic product annual growth rate is 1.7 percent, while 2012 projections stand at 2.5 percent. Actual GDP annual rates rose 3 percent in 2010 and dropped 3.5 percent in 2009.

Existing-home sales are also expected to increase, according to NAR’s forecast, by 1.2 percent in 2011 and 5.1 percent in 2012, thanks to a projected strong 2012 third quarter. Median existing-home prices are still expected to drop 4.4 percent to a $165,900 average, in 2011 and recover 2.6 percent to $170,200 in 2012.

NAR’s latest economic forecast anticipates 4.97 million sales of resale homes in 2011, with home prices falling from $172,900 in 2010 to $165,200 this year. Those numbers are anticipated to jump in 2012 to 5.22 million sales and a median resale home price of $168,200.

NAR projects 303,000 new single-family home sales this year (down 5.9 percent from 2010), with the new-home median price rising 1.5 percent, to $224,300. The association anticipates new-home sales will climb to 352,000 in 2012, with the median new-home price climbing to $230,100.

NAR projects that 30-year fixed-rate mortgage rates will stay roughly level over the next two years: averaging 4.5 percent in both years (down slightly from 2010’s 4.7 percent).

The unemployment rate, according to NAR, will improve gently over the next two years, from 9.6 in 2010 to 9 percent this year and 8.6 percent in 2012.