Wednesday, June 9, 2010

Pending Home Sales Surge Continuing

For the last three months, pending home sales have been on their way up, according to the National Association of Realtors®. This is a welcome result of the broad impact of the home buyer tax credit.

When first time home buyers were rushing to beat the tax credit deadline in October, the index reached 112.4. What’s amazing is that pending home sales are just as high now as they were then. Note, though, that this data reflect contract and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, claims that this second surge of sales from the tax extension looks just as strong as the original.

“There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said.

As long as the economy continues to add jobs, the housing market is in good position to return to sustainable levels even without government stimulus.

The best news? NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

Here are a few more interesting trends:
  • The PHSI in the Northeast jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
  • In the Midwest the index rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
  • Pending home sales in the South slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
  • In the West the index rose 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.
If you have any questions about the pending home sales index or the state of the market in the North Shore, please don't hesitate to contact me. I'm here to help.

Janie Bress

Your North Shore Real Estate Expert

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