Pending Home Sales Index - PHSI

An index created by the National Association of Realtors (NAR) that tracks homes sales in which a contract is signed but the sale has not yet closed. The pending home sales index is a leading indicator of future existing home sales as it typically takes four to six weeks to close a sale after a contract has been signed.

Understanding demand for housing can help investors keep a finger on the pulse of the economy in general. To purchase a house, people have to be financially capable of maintaining the home and the mortgage payments. As housing demand increases, it can be inferred that people are either making more money, or feeling more confident in their ability to make mortgage payments.