Pending home sales, a leading indicator for the housing market, slowed for the third consecutive month and demonstrates that a market transition is firmly in place, according to the National Association of Realtors.

The Pending Home Sales Index, based on contracts signed in November, slipped 2.5 % and is 2.5 % lower than November 2004.

The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.

David Lereah, NAR’s chief economist, said the index remains at a high level. “Although pending home sales are trending down from a record in August, the index remains well above a mark that is considered to be historically strong,” he said. “We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales,” Lereah said. “In other words, home sales have been peaking for the last five years and we will land on a high plateau in 2006 – a market that will be healthy for both buyers and sellers. Investment fundamentals for housing remain solid, preserving generally favorable affordability conditions while offering solid returns as well as a place to live.”