Pending Home Sale

In January 2005, the National Association of Realtors (NAR) introduced a new series of reports to overcome the lagging effect of the existing home sales definition. The new report is called Pending Home Sales and is published on monthly basis (first week of the month). The Pending Home Sales data are based on sales of existing homes where the contract has been signed (house was sold on paper) but the transaction has not been closed, which could be considered roughly equivalent to the new home sales. When a home sale contract is sign a broker considers it as a sale and reports it as a sale. However, until transaction is not closed this sale is considered as pending and not closed. Taking into account that some sales contracts are never consummated, pending contract cannot be considered as existing home sale.

The pending Home Sales data are are expressed as an index and were recalculated back to 2001 where the the index has been set to equal 100.0. The Pending Home Sales Index (PHSI) is considered as leading indicator of the activity in the housing market and this index is used to predict Existing Home Sales (Pending becomes Existing in several months) as well as predict actual home sales activity.