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Matt Martin Real Estate Management has been a proven partner of major government agencies, let us prove ourselves to you. » Due Diligence » Property Management » Property Preservation » Disposition » Acquisition Services » Loan File Review » HOA Services www.mmrem.com | info@mmrem.com | 703.766.5777 JANUARY PENDING HOME SALES RISE TO HIGHEST LEVEL IN NEARLY 3 YEARS By Mark Lieberman, Economist for the Five Star Institute The National Association of Realtors' (NAR) Pending Home Sales Index (PHSI) rose 4.5 percent to 105.9 in January—its highest level in almost three years. The monthly increase was the strongest since last May, when the index rose 4.9 percent. Economists had expected a 3 percent increase to 104.8 from December's originally reported 101.7 reading. With January's pending sales results, the December index was revised down to 101.3. NAR's PHSI is based on home sale contracts, not closings. It is supposed to be a leading indicator of completed transactions, but it's not always an accurate predictor. The index rose in January, July, and October last year, but following each increase, closings fell two months later. Despite January's strong report, NAR chief economist Lawrence Yun remained cautious. "Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home 40 prices are projected to rise more strongly because of inventory shortages," Yun said. Indeed, the inventory of homes for sale dropped sharply in January, according to NAR's existinghome sales report released prior to the pending sales index. For-sale homes fell to 1.74 million the lowest level since December 1999, when the inventory was 1,714,000. The months' supply of existing homes for sale (computed against the sales pace) dropped to 4.2 months in January, the lowest since April 2005, when it was 4.3. The month-over-month trend in sales correlates inversely with the movement in the median price—that is, when the median price rises, sales dip, as happened four times in 2012; in the four months in which the median price dropped, sales rose. In January, the median price of an existing single-family home fell 3.7 percent—the steepest one-month drop in a year—and sales rose, albeit modestly, by 0.4 percent. The median price is at its lowest level since last March, according to NAR. The PHSI in the Northeast rose 8.2 percent to 84.8 in January and is 10.5 percent higher than January 2012. In the Midwest, the index increased 4.5 percent to 105, 17.7 percent above a year earlier. Pending home sales in the South rose 5.9 percent to an index reading of 119.3 in January, up 11.3 percent from January 2012. In the West, the index edged up 0.1 percent to 102.1 but was 1.5 percent below the year-ago reading. The PHSI is based on a large national sample, representing about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy. KNOW THIS YouTube is the top video research destination for home shoppers, according to Google's Home Shopper Survey, with 86% on online shoppers relying on video to find out more about a specific community and 70% turning to video for home tours.