Leave it to the NAR to focus on the wrong portion of their own data: As we have seen since Housing peaked some 4 years or so ago, the more significant data is the year over year changes in contract signings. The index is based on sales contracts on existing homes (mostly excluding REOs and foreclosures).
And in April, the PHSI actually improved 3.2% from April 2008. To be certain, this is a step in the right direction.
In the past, we have mostly ignored the monthly improvement when the overall number was negative. As the NAR note themselves, “There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.”
However, take the the PHSI up 3 months in a row, and the positive annual change as a positive incremental improvement. Not the beginning of a new bull market for houses, but a potential signs things are stabilizing.
Of course, it wouldn’t be an NAR release if there wasn’t something nonsensical in it — this month, the emphasis is on the “NAR’s Housing Affordability Index being is in record territory.”
As we so conclusively demonstrated some time ago, the NAR’s Housing Affordability Index is rather useless.
Previously:
NAR Housing Affordability Index is Worthless (August 13th, 2008)
http://www.ritholtz.com/blog/2008/08/nar-housing-affordability-index-is-worthless/
Source:
Pending Home Sales Up for Three Months in a Row
NAR, June 02, 2009
http://www.realtor.org/press_room/news_releases/2009/06/phs_up
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