I believe the RBI Pending Home Sales Index is far more accurate in measuring the current state of the housing market than any other index available for the region covered by MRIS.
If you’d rather not listen to my voice for 6 minutes 24 seconds, here are the key points:
1. Pending sales (the number of signed buyer/seller contracts) lead price trends and is more immediately reactive to changes in the market (think federal home buyers tax credit expiration, Lehman Brothers bankruptcy, etc.)
2. Pending sales reflect the market 60-90 days before closed sales.
3. National housing indices such as S&P/Case Shiller lag the market by as much as 6 months months from when the buyer and seller sign the sales contract, known as “meeting of the minds.” CSI measures closed sales (see #2) and allow the data to be “seasoned” (sit for a while until enough is collected) for an additional 2 months and then report on the findings 2 months after that).
4. Housing markets have definitive seasons defined by patterns of sales activity and price changes. “Repeat sales indices” such as S&P/Case Shiller and FHFA do not reflect seasons because of their methodologies.
5. No “adjustments” are made to our pending sales indices because “what you experience is what you get” – while most national housing indexes try to “smooth” the market to eliminate seasons through (often undisclosed) adjustments.
I’ve also provided a brief analysis for Baltimore Metro and Washington, DC Metro via podcast over at RBI’s blog: