Landon Huffer- Texarkana Real Estate Broker

Pending Home Sales Up Again! | June 15, 2009

Pending Home Sales Up for Three Months in a Row

WASHINGTON, June 02, 2009

Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®. The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5. Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.” The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008. NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said. “Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.” NAR’s Housing Affordability Index2 is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970. A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800. Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.” The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.

Landon Huffer- Real Estate Broker

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Posted in Real Estate

3 Comments »

  1. This is really good news! I think that when pending sales go up, it\’s a good sign of things to come for the real estate business all over the nation.

    Comment by Micha — June 17, 2009 @ 4:52 AM

  2. Another month, another set of data that is not cross referenced with any other sources. Let’s not be naive, the real estate market needed to adjust. At the same time, the companies reporting on these changes need to provide more data than just a median sale price change based on a limited set of sales. We are not even comparing apples to oranges here.
    Accuriz.com has been reporting data on New York for years and they refer to valuation changes on a price per square foot basis. Why doesn’t Case Schiller do this?
    Here is my point to the argument. Median Sale Price is down 10% from $220k to $200k. Okay, but if the Median Square Foot was 2,000 square feet last year and this year it is 1,900 then the actual change is 5%.
    If we look at real estate in a one-dimensional manner we will continue to see fluctuations like this in the markets. We need to analyze the data in more complex terms for the consumer to stop the panic and fear tactics.

    Comment by John Watch — June 15, 2009 @ 12:57 PM

    • You are correct, but this article addresses the fact that PENDING homes sales are up. It is not discussing the prices of homes.

      Thanky you for your comment.

      Comment by Landon Huffer — June 18, 2009 @ 1:27 PM


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I am a young, eager, and aggressive Real Estate Broker with Schimming Company Commercial Real Estate.

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