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Location: Mars Hill, NC, United States

A small, highly personalized real estate firm specializing in mountain homes and land in greater Asheville.

Wednesday, July 01, 2009

Pending Home Sales: May, 2009

The PHSI, (Pending Home Sales Index), for May rose 0.1% from April, and stands 6.7% higher than one year ago.

The Context
PHSI, as the name implies, represents contracts signed not sales that have closed yet. Historically, (probably pre-2006), the index was a reasonable predictor of future sales. The subsequent distortions in the market have made it notably less reliable.

For example, the PHSI rose by 3.6% in April 2009 vs 2008, while existing home sales in May 2009 fell by 3.6%, and new home sales fell by 35% vs. the same month in 2008. Why is that?

From The Wall Street Journal: An article that outlines some reasons why PHSI is no longer a solid predictor. Among these would be higher rates of contract cancellations than in the past. Contracts fall apart for many reasons, lack of financing being one key.

Others have noted the run up in interest rates, tighter lending standards, falling equity, and the inability of home owners to sell their homes back home as factors in the rising cancellation rates.

The last item is one of particular importance in greater Asheville, and the mountain counties, relying on buyers from feeder areas as we do.

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Black Bear Realty Website
828 689 2055
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Filed Under: Real Estate Statistics and Data

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