The pending home sales index, or PHSI, came in at 73.7 for March, a 1.5% increase from a revised 72.6 in February, exceeding expectations of a 0.5% increase. Regionally, the Northeast was the strongest at 58.8 (+ 4.4% month-over-month), and 91.6 in the South (+3.9% MoM), compared to 73.9 in the Midwest (-1.3% MoM), 56.9 in the West (-2.6% MoM).
The PHSI is a leading indicator of housing activity and measures housing contract activity, based on signed real estate contracts for existing single-family homes, condos and co-ops. Since a home goes under contract a month or two before it is sold, the PHSI generally leads to existing home sales by a month or two. An index of 100 is equal to the average level of contract activity during 2001, at the start of a period of historically high level of home sales activity.
The ABA Office of the Chief Economist believes that the increase in pending home sales is reflective of increased inventory and pent up demand despite higher mortgage rates. For banks, historically subdued turnover is likely to keep mortgage origination volumes muted in the near term.
