When looking at all the indicators in the real estate market, realtors make some typical conclusions. Traditionally, they look at the pending home sales in any one month and believe that the actual purchases would be fairly close a few months later. However, realtors may need to observe some other important factors when forecasting actual home sales.
When an offer to purchase a home is accepted by the seller and a contract is signed, the transaction is considered a pending sale. Once a month, The National Association of Realtors® publishes a report with this information. Unfortunately, not all pending sales result in an actual sale. Whether the buyer fails to secure a mortgage, the seller cancels the deal or the home inspection reveals some major issues, pending home sales are never a sure bet. The good news is that the pending sales report still provides important data to make positive predictions.
But wait, there’s more! Hidden in the pending sales report figures is the purchase price information. By looking at the Housing Price Index (HPI), real estate agents can notice how price changes are affecting the residential market. By closely comparing the pending home sales with the actual home sales and the mean sales price, there are some interesting conclusions to make.
Taking the usual lag time between the pending and actual home sales into consideration, realtors can also forecast the movement of projected home prices. Armed with this information, realtors can help their clients realistically set their purchase price or evaluate whether a certain home is good buy.