THE HOUSING HEADLINES early last November were enough to hearten even the most hardened Seattle cynic. “Pending home sales spike,” crowed seattlepi.com the day after the Northwest Multiple Listing Service released its statistics for the month of October. “Home sales leap to highest of the year,” trumpeted The Seattle Times one day later. But while the rosy reports were technically true, the real estate reality of that perceived market rebound—particularly when it came to those so-called pending sales—was more nuanced than that.

For starters, the MLS—and in turn, the papers—based that spike on a year-over-year increase over the previous October, which also happened to be the month that the U.S. economy almost slipped into the abyss. Pending sales of single-family homes and condos had remained steady in July, August, and September 2008, but took a precipitous drop that October. As a result, the numbers for October 2009, which were consistent with the previous two months, couldn’t help but look stellar in comparison.

But muddying the reporting even further in today’s still murky real estate climate is the fact that the MLS publishes pending sales stats at all. Pending sales, as defined by the broker-owned organization, are those in which a buyer and seller have reached an agreement but the sale has yet to close. In a normal market—when buyers close in less than 30 days—those numbers work as a predictor of the following month’s closed sales figures. In the third quarter of 2009, though, closed sales lagged pendings by hundreds of units—and in some cases nearly a thousand—even when the closing window extended to 60 or 90 days. In June, 3,042 homes in King County went pending; three months later, only 2,016 had closed. “Pending sales have no value for the individual who’s trying to figure out what’s going on in the market,” says Tim Ellis, of the real estate blog seattlebubble.com. “All that number tells you is that there are a lot of people out there trying to buy homes who for some reason or another aren’t succeeding.”

What it tells Bob Gent, NWMLS’s director of business development and member relations, is that the recent increase in short sales—in which homes sell for less than what the seller owes, and which can take several months to close—is clogging the pipeline. (That may be partially to blame, but just 145 short sales closed in King County in October, far from enough units to account for the discrepancy between closings and pendings.) “Is it pie in the sky? Can it be misleading?” Gent says of the pending numbers. “Absolutely. But if there’s good news, we’re going to report it.”

So what stats should you watch if you’re obsessing over the market’s movements? Ellis suggests sticking with closed sales. “As far as trying to determine general trends,” he says, “I’ve never seen the real benefit of trying to get earlier but probably inaccurate data instead of something that’s a little less timely but more reliable.

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