Pending sales of resale homes grew 6.4 percent from July to August, hitting the highest level in about two years, the National Association of Realtors reported — it was the seventh straight month of increase for the group’s pending sales index.
Pending sales are sales where an offer has been accepted but the sale has not yet closed. Even though some pending sales never close, pending sales are an indicator of current buyer activity. This increase can be attributed to low interest rates, a pickup in foreclosure sales, and improved affordability.
The Associated Press Economic Stress Index indicated that foreclosures stabilized in June in the three states hardest hit by the housing downturn: Florida, Nevada and California. The California Association of Realtors reported that the statewide median home price for resale homes rose for the sixth month in a row in August, with sales dropping 5.1 percent from July to August but up 9 percent compared to August 2008.
HOUSE HUNTING TIP: The increase in home sales may be in part due to the $8,000 tax credit available to first-time buyers who qualify. To use this credit, a home purchase must close by Nov. 30, 2009. Some experts think the market may slow again when this credit expires. It’s possible the credit may be extended.
Other good news suggests that the recession might be winding down. The Federal Reserve’s "Beige Book" for June noted that business spending had picked up, although not dramatically. The threat of inflation appears to be on hold. Manufacturing is picking up in some areas and decreasing less dramatically in others. The housing market improved in some areas.
For example, DataQuick, a real estate research company, reported that the median price in the San Francisco Bay Area rose 13.4 percent in July compared to the previous month. The median price was 15.8 percent below a year ago. But the number of distressed sales dropped in July while the number of higher-priced home sales rose.
The number of homes sold for the month of July was 17.9 percent higher than a year ago. In August, the sales volume and median price for the area declined. It’s impossible to know if this is a blip or the beginning of a trend. …CONTINUED
The Standard & Poor’s/Case-Schiller’s 20-city home-price index released in September was up for the third consecutive month in July — 18 of 20 tracked metro areas had price gains in September. Home prices in the second quarter were 14.9 percent lower than they were in same quarter of 2008. However, the rate of home-price deterioration slowed.
Construction of single-family homes increased in July for the fifth straight month, according to Census Bureau stats, but dropped 3 percent from July to August. New-home construction is still 70 percent below the peak of the housing market in 2006, but up 37 percent from winter 2008.
Recent good news suggests the housing market may be stabilizing — although most analysts agree it’s too soon to be certain, and it will be some time before home prices rise significantly. Weighing heavily on economists’ predictions are the high unemployment rate and concern that more foreclosures will hit the market. According to the U.S. Comptroller of the currency, 53 percent of loans modified by lenders during the first half of 2008 are again in arrears.
Now is a good time to make a long-term purchase if you can afford to and you have job security. But don’t buy a home just because it seems like a good deal.
THE CLOSING: A bargain could end up costing too much if you overpay in a multiple-offer competition or have to move again soon.
Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide."
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