Table of Contents

Pending Home Sales Index (PHSI): What It Means, How It Works

By

澳洲幸运5官方开奖结果体彩网:Alexandra Twin

Updated August 26, 2024

Reviewed by

Doretha Clemon

Fact checked by

Ariel Courage

Couple moving into house — Maskot/Getty Images

What Is the Pending Home Sales Index (PHSI)?

The Pending Home Sales Index (PHSI) is an index created by the National Association of Realtors (NAR) 𝄹that tracks home sales where a contract is signed but the tr✃ansaction has not yet closed.

The PHSI is a leading indicator of future existing home sales. It typically takes four to eight weeks to close a home sale after signing the contract. Data for the PHSI was first analyzed in 2001.

Key Takeaways

The Pending Home Sales Index (PHSI) is a monthly housing market index released by the National Association of Realtors.
The PHSI shows the sales numbers of signed contracts that have yet to close; the closing process can take up to two months.
The Pending Home Sales Index is closely watched by investors as a leading indicator of existing home sales and the economy's health.
The PHSI is more relevant than the monthly existing home sales, which documents the number of home sales using mortgage closings.

Understanding the Pending Home Sales Index (PꩲHSI)

The Pending Home Sales Index (PHSI) is considered the 澳洲幸运5官方开奖结果体彩网:leading indicator of housing sales because it is based on a large sample of housing contracts in the United States. The PHSI basis is transactions marked as “pending home sale” in a 澳洲幸运5官方开奖结果体彩网:Multiple Listing Service (MLS). MLS is an online database of properties at all stage൩s of the sales cycle.

There are multiple MLSes across the country. An MLS is used by realtors, buyers, sellers, 澳洲幸运5官方开奖结果体彩网:mortgage lenders, brokers, title agents, and others to access ♎;accurate, real-time informat𒁏ion about individual transactions and the real estate market.

The PHSI is based on information from over 100 MLSs and accounts for 20% of all transactions. This wealth of information makes PHSI more accurate and a better predictor of sales than other measurements, such as mortgage applications and new home starts. The falloff rate of home sales that go under contract but do not close is accounted for because the PHSI takes the aggregates or combines, the figures. NAR calculates that 80% of 澳洲幸运5官方开奖结果体彩网:homes that go into contract end up closing within two months.

Penℱding Home ♛Sales Index (PHSI) vs. Existing Home Sales

The number of 澳洲幸运5官方开奖结果体彩网:existing home sales is released monthly by the National Association of REALTORS® (NAR) along with the Pending Home Sales Index (PHSI), but PHSI is generally considered a more accurate measure of real estate market strength. This belief is because the majority of the labor involv🌱ed in selling a home for the seller, buyer, realtors, and☂ lender is in the service of getting to a signed contract on the house.

Meanwhile, the 澳洲幸运5官方开奖结果体彩网:mortgage closing, measured by🌠 the existing home sales index, represents the end of the sales cycle but is a technicality. Buyers, sellers, realtors, and mortgage lenders cannot influence the timeline between the signed contract and the close.

This means that PHSI measures the number of sellers listing and buyers buying, as well as the activity of the realtors involved. Since PHSI is an index m🌊aintained and published by the NAR, its focus is on measuring activity꧟ by realtors.

While not all signed contracts will result in closed sales, PHSI is generally a highly accurate measure of existing home sales looking out one to two months in the future. This future-looking view means that the PHSI can help realtors predict sales♛ and advise their clients about strategies for selling and buying properties. PHSI also reflects economic conditions and consumer confidence, because it is an immediate m𓂃easure.

Tip

Buying a home is a substantial financial commitment. Be sure you can afford the monthly 澳洲幸运5官方开奖结果体彩网:mortgage payment, 澳洲幸运5官方开奖结果体彩网:property taxes, 澳洲幸运5官方开奖结果体彩网:homeowners insurance, and utilities. 🐎Also, you should have🤡 stable employment and income and a solid credit history.

When Did the Pending Home Sales Index Drop to the Lowest Level on Record?

The pending home sales index fell to an all-time low in May 2024, falling 2.1% from the previous month and 6.6% versus the prior year. This was the lowest level since the National Association of Realtors began tracking this metric in 2001. High interest rates and a very low supply of homes could be potential causes of the drop.

What's the Difference Between Under Contract and Pending?

The "under contract" status usually means there are still contingencies left to clear, while the "pending" status means all contingencies have been met and the deal will close soon.

Where Are the Most Homes Sold in the U.S.?

In 2023, more houses were sold in South Carolina, with 77.30 sales per every 100,000 people, and an average price of $301,659. Arizona came in second place (76.82 sales), followed by North Carolina (75.74).

The Bottom Line

The Pending Home Sales Index (PHSI) tracks home sales where a contract is signed, but the transaction has yet to close. It's based on existing contracts for single-family homes, condos, and co-ops. Since pending home sales measure actual existing home sales, the PHSI provides an accurate and reliable indicator of future home sales activity.

Article Sources

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