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Tag Archives: Pending Home Sales,Existing Home Sales

Pending Home Sales Point To Seller’s Market This Summer

Pending Home Sales (2010-2011)The National Association of REALTORS® Pending Home Sales Index rose for the third straight month last month.

A “pending home sale” is a home under contract to sell, but not yet closed.

The Pending Home Sales Index rose 5 percent in March, posting its second-highest reading since April 2010. Not coincidentally, that month marked the expiration of last year’s federal home buyer tax credit.

Home buyers and sellers in San Francisco would do well to watch the Pending Home Sales Index each month. This is because — unlike most government and private data — the Pending Home Sales Index is a “forward-looking” indicator.

Because 80% of “pending” homes close within 2 months, and a significant share of the rest close within months 3 and 4, the Pending Home Sales Index tends to correlate to future strength (or weakness) in housing.

The Pending Home Sales Index, in other words, is an excellent precursor to the Existing Home Sales report, issued monthly.

By region, the Pending Home Sales Index varied last month.

  • Northeast : -3.2% from February
  • Southeast : +10.3% from February
  • Midwest : +3.0% from February
  • West : +3.1% from February

All 4 regions were worse from a year ago.

As with everything in housing, however, we must remember that real estate is neither national, nor regional. It’s local. Sales volume may be higher in areas like the Midwest, but that doesn’t mean that all Midwest markets are experiencing similar gains, if any gains at all.

To get local real estate data , talk to a real estate agent that specializes in that area. It’s the best way to know what’s happening on the street level.

Home Sales Are Back On The Rise After A 2-Month Pullback

Pending Home Sales January 2009-July 2010Just one week after reports of Existing Home Sales and New Home Sales plunging, the housing market is signaling that auturm may fare better than did summer.

The number of homes under contract to sell rose 5 percent in July.

The data comes from the July Pending Home Sales Index, as published by the National Association of Realtors®. By definition, a “pending home sales” is a home that is sold, but not yet closed.

Historically, 80% of such homes close within 60 days which makes the Pending Home Sales Index an excellent, forward-looking indicator for the real estate market.

Indeed, the nationwide drop in home sales this summer was foreshadowed by the Pending Home Sales report.  The index dropped 30 percent in May. Then, two months later in July, it was shown that Existing Home Sales volume dropped 29 percent.

That’s a strong correlation.

Now, to be fair, the July Pending Home Sales Index is still relatively low; the second-lowest on record and well below last year’s numbers. But, the tick higher last month shows how housing may be stronger than than what the headlines report.

It appears that buyers in Santa Rosa took advantage of rising inventory, cheap financing, and stagnant prices, and pushed the market forward. We should expect similarly promising numbers when September’s Existing Home Sales data is released.

Pending Home Sales Data Shows Great Deals On Homes Are Getting Harder To Find

Pending Home Sales Oct 2008 to April 2010The Pending Home Sales Index shot higher in April as low mortgage rates and a soon-to-expire federal tax credit spurred home buying in Los Angeles and across the county.

A “pending home sale” is a home that’s under contract to sell but not yet closed.

Region-by-region, April’s pending home sales varied versus March’s data:

  • Northeast Region: +29.5%
  • Midwest Region : +4.1%
  • South Region : -0.6% (after a +15.9% posting in March)
  • West Region : +7.5%

On an annual basis, the Pending Home Sales Index is higher by 22 percent.

April marks the third straight month that pending home sales are up and today’s buyers should take note. This is because, according to the National Association of Realtors®, 80% of homes under contract close within 60 days.

In other words, May and June’s existing home sales data should be similarly strong, causing the real estate market to gently shift in favor of sellers.  In fact, already, we’re seeing home resales touch multi-year highs while new home supplies fall to multi-year lows.

All of it tends to push home prices higher while simultaneously reducing buyer negotiation leverage. That, coupled with the high probability of higher mortgage rates ahead, means that finding “deals” will get tougher for the average home buyer.

In looking at the housing market data, it appears that the best month in which to have bought a home this year was February.  The next best time may be right now. 

Talk to your real estate agent if you’re planning to buy a home this year.  It may be sensible to move up your time frame a few months.

Pending Home Sales Predicts A Stronger Spring Market

Pending Home Sales (June 2008-Dec 2009)The Pending Home Sales Index rose slightly in December, climbing 1 percent from November.

A Pending Home Sale is a home that is under contract to sell, but not yet sold. It’s a figure compiled by the National Association of Realtors® using sales data from over 100 regional listing services and more than 60 large brokerages around the country.

Because each pending sale is a true measure of sales activity, the Pending Home Sales Index is purported to be the most reliable forward-looking indicator for housing. 

Recent data supports this hypothesis.

After Pending Home Sales plunged 16 percent in November, Existing Home Sales fell by 17 percent in December.  Based on the most recent Pending Sales Index, therefore, we can expect January’s closed sales to be similarly level.

For home buyers in San Francisco , this is all a bit of good news. Home prices are based on the supply-and-demand balance that exists between buyers and sellers.  When buyers outnumber sellers, like they did through most of 2009, home supplies dip and, in fact, the national home inventory nearly halved during the 12 months ending November 2009.

With fewer homes for sale, multiple-offer situations were almost commonplace and home values rose as result.

Activity has since slowed, however, and fewer buyers are in today’s market. The supply-and-demand equation has shifted back some. In December, home supplies rose for the first time in 7 months and January will likely show the same.

The net result: Home buyers have more homes from which to choose and that can create negotiation leverage for better prices and better concessions.

With mortgage rates still low and a looming deadline on the homebuyer’s tax credit, market activity should be strong between now and April.   Take your time and bid right. And when you’re ready, be ready. The best deals likely won’t last.

 

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