Pending Home Sales On The Rise
August 20th, 2008 categories: Our Market
The Pending Home Sales Index, a forward looking indicator based on contracts signed in June, rose 5.3 percent to 89.0 from a revised reading of 84.5 in May nationally. This is certainly improvement although the index still lags behind last year’s number of 101.4. More regionally, for those of us concentrated in the West, the index rose 4.6 percent in June bringing the overall index number to 101.0, essentially on par with the national average in June 2007 and a slight 1.7 percent below last years regional number.
Lawrence Yun, NAR chief economist, said sales have been in a pattern of rising and falling within a fairly narrow range. “The vacillation of data from one month ot the next indicates a housing market in transition,” he said. “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.” Sales gains have been consistently strong in recent months in Sacramento, California; Las Vegas, Nevada; and Ft. Myers, Florida, where affordability conditions have greatly improved.
NAR President Richard F. Gaylord, said the housing stimulus package will provide long-term relief. “Provisions to stem foreclosures are helpful, but a greater lift to the ecomony should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit,” he said. “These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory to make an investment in their future,” Gaylord said.
With roughly 2.5 million first-time home buyers taking advantage of the temportary tax credit, exisitng-home sales are likely to rise 7.0 percent to 5.51 million in 2009 from an expected total of 5.15 million this year.
The 30-year fixed-rate mortgage, which also has been vacillating, is likely to trend up to 6.5 percent by the end of 2008, and then hold at that level for most of next year. NAR’s housing affordability index is forecast to remain favorable this year, averaging 13 percentage points higher than in 2007.
Growth in the U.S. gross domestic product (GDP) is expected to be 1.7 percent this year and 1.5 percent in 2009. The unemployment rate is projected to average 5.5 percent in 2008 and 6.0 percent next year.
Inflation, as measured by the Consumer Price Index, is seen at 4.1 percent in 2008 and 2.6 percent next year. Inflation-adjusted disposable personal income is estimated to grow 1.7 percent this year and 1.1 percent in 2009.
Indictators point to improvement in the overall market albeit at a slow pace. Consumer confidence is also expected to get a much needed shot in the arm after the 2008 U.S. Presidential Election, some say regardless of the political party that wins the office.
What are you seeing in your neck of the woods? I know the news media loves to tell the sad tale of a market in distress but as you look around your own neighborhood, what signs are you seeing today? Are homes selling? We, (JB Home Sellers) are experiencing a relatively dramatic increase in buyer activity, particularly focused in Downtown San Diego and A+ Coastal locations. There is also strong demand from investors looking to take advantage of the distressed properties available in these more affluent areas. So at least locally, we are seeing the impact of a market inefficiency creating strong investment potential.
I’d love to hear your point of view…
Great news.
Aloha,
Keahi