The pending home sales index rose in June. The increase is a welcome development for the troubled housing market. The National Association of Realtors’ seasonally adjusted index increased 5.3 percent to 89 from May’s revised reading of 84.5.

The June index was 12 percent below of the June 2008 reading. Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month waiting time before a sale is completed.

Last month, the Realtor group said completed sales of existing homes fell more sharply than expected in June, pushing activity down to the lowest level in more than a decade. Many analysts predict home prices will keep falling until at least next spring as tighter credit, a weaker job market and rising foreclosures scare potential buyers away.

Still, the NAR predicts a package of housing legislation signed by President Bush last week — particularly a $7,500 tax credit for first-time homebuyers — will aid a recovery.

"With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009," Lawrence Yun, the group's chief economist, said in a statement.

Indications of a longer US housing market’s slump are still observed. The usual effects of spring season which usually brings in increased sales was not felt this year and a recovery is perceived to be more that a year from now.

The National Association of Realtors’ pending home sales index, released today, declined by 4.7 percent in May to 84.7 from the rising revised April reading of 88.9. The May’s index is the third-lowest reading on record in the index history.

The index was 14 percent down compared to last year's level. Pending home sales are homes which the seller has accepted an offer, but the deal has not yet closed.

The decline “suggests we are not out of the woods by any means,” said the trade group’s chief economist Lawrence Yun.

Pending home sales fell in all regions. In the West, they declined 1.3% during May but remain 2% above year-ago levels.

Sharpest declines were in the South, where May pending home sales dipped 7.1%. Northeast and Midwest declines are 2.9% and 6% respectively.  
 

The pending home sales index was at its highest level in April since October last year, but still down 13% compared from last year’s reading, according to a report released by the National Association of Realtors. Price declines are still expected and may even take an even bigger hit.

The index which measures the number of homes under contract to be sold unexpectedly increased in April to 88.2 up by 6.3% from a March reading of 83 and the highest level since October. This was seen as a result of buyers taking a chance on getting bargains.

Despite the increase, the index registered a decline of 13.1% compared to April 2007 and down 29% from the index's peak in April 2005.

NAR revised its existing home price outlook for 2008 downward. The group's June projections see prices falling 6.4% by the end of the year; in May it said 2008 prices would fall by 2.4%.

In conjunction with falling prices, the report issued a slightly improved 2008 forecast for existing home sales. NAR now expects to see home sales dip by 4.5%, whereas in May it expected a decline of 4.7%.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," said Lawrence Yun, chief economist for the NAR in a statement.

The Pending Home Sales Index was strongest in the Midwest, where it jumped 13%, and weakest in the Northeast, where it declined 1.9%.

The trade group's Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR's closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing sales contract is signed.

The Pending Home Sales index debuted in 2001, and a reading of 100 is equal to results that first year.

The National Association of Realtors released its pending US home sales index with a decline. The home sales index dropped to a new low in March, signaling the housing slump is still in the air even during spring when home sales are relatively up compared to the rest of year. Spring selling season may not be evident this year.

The National Association of Realtors' seasonally adjusted index of pending sales for existing homes fell to 83.0 from a sliding revised February index of 83.8, which was the previous low. The index dipped more than 20% compared to March 2007 reading of 103.9.

A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

Falling home prices and a tight credit environment are still the main hindrance to the housing market recovery. It has made potential buyers wait for the slump to be over.