The National Association of Realtors, or NAR, released its Pending Home Sales Index today, which showed continued strength in broad housing market data. The report, which measures signed contracts — often viewed as a leading indicator for future sales — came in at 84.6, up from 82.0 last month and the 83.7 reading in March 2008.

Low supply, largely due to banks holding back foreclosure inventory from the market, helped drive buyers to seize on what appear to be the only deals in town.

For the past 2 months, housing market data has gotten less bad, leading many optimistic “experts” to assure the country that the worst is over, and that real estate will be back on its northward way in short order. Nowhere in the carefully-worded press releases from the NAR, however, is mention of the actual cause of dropping supply. The real estate lobby is assuring us recent market “strength” has been caused by tax credits, low interest rates and increased affordability.

And while those factors are indeed driving the demand side of the equation, the supply side of the picture is still being driven by the market for bank owned homes. As lenders are now free, after the lifting of a series of foreclosure moratoria, to release their latent supply of homes onto the market, the true strength of this data–and the alleged green shoots of a recovery–will be put to the test.

Tags: bottom, Foreclosures/REOs, NAR, pending home sales

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