May 30, 2018

New Pending Home Sales Continue Moving Higher

New pending home sales continued trending higher as the market enters its prime buying and selling season.

The Northeast Tennessee Association of Realtors® (NETAR) New Pending Home Sales Index (PHSI), a forward-looking indicator based on new contract signing reported by Realtor Property Resource (RPR), was 1.8% higher than March, and 10.2% better than April last year.

Aaron Taylor, NETAR president, said the local housing market is off to a strong start with year-to-date single-family resales up 5.4%. The PHSI points to that momentum continuing in the short-term, but the lack of inventory is beginning to dampen the outlook for some buyers, he added.

"So far this year there have been 3,174 new listings and 3,888 new approved contracts. So, listings are down 1.9% from the first four months of last year while new approved contracts are up 21.2%. At the end of April, we had 2,472 active listings. During the same month last year there were 3,248. At the current sales pace, we have 3.8 months of inventory for the region. But in the city markets inventory is below a three-month supply," he added. Six months of inventory is considered normal market conditions.

Consumer confidence in the economy continues keeping demand high, and steadily increasing mortgage rates are nudging buyers to lock in deals instead of waiting, Taylor said.

There were 877 new approved contracts in April bringing the total pending sales to 1,259. April's new pending sales index was 131.6, up 10.2% from April last year and the active, pending sales index was 111.2, up 0.8% from April last year. Both indices are benchmarked to the 2015 annual average pending sales totals. A number above 100 indicates increasing closing. Below 100 signals declining closings.

NETAR's Pending Home Sales Index is a leading indicator for the housing sector based on pending sales of existing homes, condos and townhomes. A sale is listed as pending when the contract has been signed, but the transaction has not closed. Sales are usually finalized in a month or two after signing. It's not uncommon to see as many as 5% falls through.

NETAR – the voice for real estate in Northeast Tennessee - is the largest trade association in Northeast Tennessee, Southwest Virginia region representing over 1,200 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries.