By AUSTIN NELSON

Data released by the NAR yesterday show that pending home sales increased at the national level by over 6% in December 2008. Analysts had been expecting the reading to be unchanged from the previous month. This index theoretically predicts home sale trends for the following month by looking at the number of signed contracts in the month under study.

While the data look rosy on the national level, speaking to a momentary surge in buying activity, a closer look reveals some interesting trends.

The national rise in the index was led strongly by the Midwest and South regions, which saw month over month increases of 12.8% and 13.0% respectively. The Northeast and West, on the other hand, saw modest declines in their indices.

This is especially interesting in the Northeast, which has seen a downward trend in sales volume since the middle of last year. The pressure does not seem to be easing, as prices in the region have also been falling over the last six months after holding up better than most other regions of the country. Home sales in the Northeast are lagging other regions where price declines began earlier, and have been more severe. Until prices have come down a little farther in this region, do not expect to see the bump in sales that the rest of the nation is seeing.

On the other side of the country, the West experienced an uptick in sales volume before activity began to increase in other regions. This is in line with the fact that the West saw earlier and more dramatic price declines than the rest of the nation.

As prices continue decline in the Midwest and South regions and government efforts to decrease interest rates kick in, expect to see continued increasing volume trends in those regions.

Now that the West has experienced one month of declining activity, watch this area to get an idea if the trend of increased volume will be a sustained process or a flash in the pan on the way down. For the buying to persist, prices will have to stabilize somewhat, giving prospective homebuyers confidence that the cheap homes they are buying represent a sound investment.

Tags: bottoom, Housing, NAR, pending home sales

This entry was posted on Wednesday, February 4th, 2009 at 5:08 pm and is filed under Housing Perspective, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.