Feb
27

Future Home Sales Looking Brighter

February 27, 2012

More home buyers signed contracts to buy existing homes last month than they have in nearly two years.

The National Association of Realtors Pending Home Sales Index for January rose 2.0 percent to 97.0, the highest mark since April 2010 when the federal home buyer tax credit was still going on.

real estate purchase contract and a penThe index is also 8.0 percent higher than it was in January 2011.

Pending home sales can predict future activity in the housing market because they measure contract signings, not closings. The sale of existing homes made up more than 90 percent of the housing market in 2011.

“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” said Lawrence YUN, NAR chief economist.

“With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”

Regionally, pending home sales in January varied, but the entire country is doing better than a year ago.

*Midwest: The PHSI fell 3.8 percent to 88.1 but is 10.8 percent higher than January 2011.

*Northeast: The index rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago.

*South: Pending home sales increased 7.7 percent to 109.1 and are 10.6 percent above the same month last year.

*West: The index fell 4.4 percent to 101.9 but is 0.7 percent better than the index in January 2011.

“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun said.

“If and when credit availability conditions return to normal, home sales will likely get a 15 percent boost, speed up the home-price recovery, and thereby significantly reduce the number of homeowners who are underwater.”

Categories: Economy

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