Existing Home Sales – Real Time Tracking

In normal times roughly 70% of new home purchases are trade-up buyers (i.e., they have an existing home to sell) so the strength of existing home sales affects the strength of new home sales.

Two series published by the National Association of Realtors (NAR) gauging the strength of the existing home sales sector are: pending sales and sales. The pending home sales index (PHSI) tracks signed (but not closed) sales contracts. The PHSI is an index that compares current monthly signed contracts to the average over 2001. The existing home sales (EHS) series is an estimate of the number of closed sales contracts in the month. The NAR reports that 80% of pending sales close within two months of signing and a significant share of the remainder close within four months, making the PHSI a reliable leading indicator of sales in the coming 4 months. Current readings in the PHSI point to strong sales for several months.