We have discussed other market numbers recently, including an analysis of days on market, absorption rate, and the overall numbers. All of them point to a slowing market. Today I want to throw a new number into the mix. We’ll call it the Pending Sales Ratio.
The number of pending sales gives a good indication of home sales activity over the next 30 – 60 days, which is typically the amount of time from the date of contract (pending status) until closing (sold status). What the graph shows is the percentage of homes on the market that are in pending status.
What you can see from the graph is that while the number homes for sale has steadily risen over the past 12 months, the percentage of those listings that are pending as remained about the same, and in some months has actually decreased. The bottom line is that we are continuing to add more homes for sale to the market without a corresponding increase in sales. Twice in the past 12 months (October, 2006 and April of this year) the percentage of inventory has been over 11%. In September, the percentage dropped to a 12 month low of 5.37%. For comparison, the pending sales ratio for the third quarter of 2006 was 14.5%.
Until some inventory clears out of the market, either by selling or being withdrawn from the market, the situation for home sellers in Dothan is going to remain tense. My advice; if you don’t have to sell right now, take your home off the market and revisit the market in the Spring of 2008.
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