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The National Association of Realtors Pending Home Sales Index jumped up 7.4 percent nationally in August. This is good news!! As I have said recently the real estate market will weather this financial storm. Once again it will be proven that the safest way to invest is to purchase a home. Check out the article I have copied courtesy of the FoxBusiness Website…Â
Pending Home Sales up Strongly
WASHINGTON, October 08, 2008
Pending home sales activity surged as buyers took advantage of low home
prices and affordable interest rates, according to the National Association
of Realtors®.
The Pending Home Sales Index,1 a forward-looking indicator based on
contracts signed in August, jumped 7.4 percent to 93.4 from an upwardly
revised reading of 87.0 in July, and is 8.8 percent higher than August 2007
when it stood at 85.8. The index is at the highest level since June 2007
when it stood at 101.4.
Lawrence Yun, NAR chief economist, said home buyers were responding to
improved affordability. What we’re seeing is the momentum of people taking
advantage of low home prices, with pending home sales up strongly in
California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C.,
region, he said. “It’s unclear how much contract activity may be impacted
by the credit disruptions on Wall Street, but we’re hopeful most of the
increase will translate into closed existing-home sales.Â
The PHSI in the West surged 18.4 percent to 109.5 in August and remains 37.8
percent above a year ago. In the Northeast the index jumped 8.4 percent to
79.8 and is 2.0 percent higher than August 2007. The index in the Midwest
rose 3.6 percent to 84.5 in August and is 6.6 percent above a year ago. In
the South, the index increased 2.3 percent to 96.0 but is 2.1 percent below
August 2007.
Yun notes the unusual timing of contract activity in August. Home buyers in
July were hampered by overly stringent lending criteria in the months before
the government takeover of Fannie and Freddie, he said. August shows some
unleashing of pent-up demand before the credit crisis accelerated in
September.
He cautioned that the sampling size for pending home sales is smaller than
the track on existing-home sales, so there is more volatility in the
forward-looking series. We need to see just how much of this gain holds
up, Yun said.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate
Specialists in Long Beach, Calif., said despite all the turmoil in world
financial markets, home mortgages are available. Mortgages have been harder
to find, and availability and terms vary depending on credit score and
location, but Realtors® can help buyers find reputable lenders while helping
them navigate the transaction process, he said. The recently enacted
economic stimulus package should help housing by gradually freeing the flow
of credit.
Yun now expects growth in the U.S. gross domestic product (GDP) to contract
for two consecutive quarters, in the fourth quarter of this year and the
first quarter of 2009, before expanding in latter part of 2009 as the
housing market begins a steady improvement.
Looking at middle-ground assumptions, existing-home sales are forecast at
5.04 million this year and 5.41 million in 2009. Following national declines
of 5 to 8 percent in 2008, home prices are projected to increase 2 to 3
percent next year.
New-home sales should total around 503,000 this year and 471,000 in 2009.
Housing starts, including multifamily units, are likely to fall 28.2 percent
to 973,000 units this year, and come in around 843,000 in 2009 as builders
continue to clear the accumulation in inventory.
The 30-year fixed-rate mortgage will probably average 6.1 percent in the
fourth quarter and rise gradually to 6.6 percent by the end of 2009. NAR’s
housing affordability index is expected to average 18 percentage points
higher this year than in 2007.
The unemployment rate is projected to average 6.4 percent in the fourth
quarter and then average 6.6 percent in 2009. Inflation, as measured by the
Consumer Price Index, is estimated at 4.0 percent for 2008 and 2.0 percent
next year. Inflation-adjusted disposable personal income is forecast to grow
1.7 percent this year and 1.0 percent in 2009.
¹The Pending Home Sales Index is a leading indicator for the housing sector,
based on pending sales of existing homes. A sale is listed as pending when
the contract has been signed but the transaction has not closed, though the
sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about
20 percent of transactions for existing-home sales. In developing the model
for the index, it was demonstrated that the level of monthly sales-contract
activity from 2001 through 2004 parallels the level of closed existing-home
sales in the following two months. There is a closer relationship between
annual index changes (from the same month a year earlier) and year-ago
changes in sales performance than with month-to-month comparisons.
An index of 100 is equal to the average level of contract activity during
2001, which was the first year to be examined as well as the first of five
consecutive record years for existing-home sales.
²Market information is from unpublished snapshot data; please contact your
local association of Realtors® for more information.
Existing-home sales for September will be released October 24; the next
Pending Home Sales Index / Forecast will be released at 11:30 a.m. EST on
November 7 at NAR’s annual convention in Orlando, Fla.
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 Eric Hadley
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