New index forecasts housing prices

by Catherine Reagor The Arizona Republic May. 26, 2010 12:00 AM

Phoenix-area home prices will climb slightly in June, take a small dip in July and then start to climb again in late August.

This prediction on home prices doesn't come from a crystal ball or an economic forecast. Metropolitan Phoenix has a new pending-sales index compiled by the Arizona Regional Multiple Listing Service. The index, a leading indicator for the housing market, can give homebuyers and sellers an accurate view of home prices a few months out.

ARMLS' Pending Price Index tracks home-purchase contracts signed but not yet finalized. But the purchase price is usually set when the contract is signed. ARMLS began testing the index in January, and since then, it has been 96 percent accurate on price fluctuations.

ARMLS is the only group that has access to all of the data from homebuying contracts signed but not yet recorded as public records. The group's tens of thousands of real-estate agent members enter contract purchase prices into the ARMLS system. The Price Index is updated with data from home sales after they close.

"Everyone wants to know where Phoenix home prices are headed," said Bob Beamis, chief executive of ARMLS. "We are in the unique position of having in our system information on home prices that no one else has, and now we are able to use that information to predict with great accuracy where home prices are heading 30, 60, 90 and 120 days out."

According to the Price Index, metro Phoenix's average home price will climb to $177,000 in June, fall to $167,000 in July and then start climbing again in late August. The upward/downward trend for median home prices is similar for the next two months.

ARMLS is unveiling its Price Index and other real-estate data, including home sales, foreclosures and listings, to its members this month through the "STAT" newsletter.

Homebuilding boost

The federal tax credit helped new-home sales increase enough in April to beat last year's pace. There were 823 new-home sales in metro Phoenix last month, according to the "Phoenix Housing Market Letter." That compares with 789 in April 2009. It's the first month this year that new-home sales have topped last year's closings.

Homebuilding in the region slowed last month as builders prepared for demand from the tax credit to wind down. There were 604 single-family permits issued in April, compared with 908 in March.


New index forecasts housing prices