Pending home sales rose again in November, part of a broad trend in recent months that could point to a gradual recovery in 2011, the National Association of Realtors’ chief economist said.

NAR’s Pending Home Sales Index rose 3.5 percent from October to November, but remained 5 percent below its level a year ago. That compares with a 20.7 percent year-over-year drop in October.

The index is a forward-looking indicator, reflecting contracts rather than closings, which normally occur one or two months later. An index score of 100 is the average level of contract activity in 2001, the first year that index data was collected.

The index fell sharply in May after the expiration of the federal homebuyer tax credits on April 30, from 110.9 to 77.7. Since then, the index has risen on a monthly basis four out of the past six months, hitting 92.2 in November.

"In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market," Lawrence Yun, NAR’s chief economist, said in a statement. "But further gains are needed to reach normal levels of sales activity."

The West saw the biggest month-to-month index jump in November, 18.2 percent, to 123.3. The region was also the only one to see a year-over-year bump, 0.4 percent.

The Northeast saw a slight monthly increase, 1.8 percent, to 72.6 — the lowest regional index in November. Year-over-year, the index fell 6.2 percent.

The Midwest saw the sharpest drops on both a monthly and yearly basis. The index there fell 4.2 percent from October and 7.7 percent from November 2009, to 78.3.

In the South, the index fell 1.8 percent month-to-month and 7.2 percent year-over-year, to 91.4.

Although some analysts think home prices in many markets could see further declines, there are indications that sales are poised for growth. But whether that growth will happen in 2011 or in 2012 or beyond remains to be seen.

"If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume," Yun said. "Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy."

Yun expects existing-home sales to grow by about 8 percent in 2011, to 5.2 million, with an additional gain of 4 percent in 2012. NAR’s forecast calls for new-home sales to grow by 24 percent in 2011, to 392,000 — still well below historic averages.

Economists at Fannie Mae expect more modest growth in existing-home sales in 2011, with just over 5 million transactions, but stronger growth in 2012, when they project 5.45 million sales of existing homes. In a December forecast, Fannie Mae economists agreed there’s potential for double-digit growth in new-home sales in 2011, projecting they will hit 384,000 in 2011 and 567,000 in 2012.

But economists at the Mortgage Bankers Association think existing-home sales will remain essentially flat in 2011, with more explosive growth pent up until 2012, when the MBA forecasts 5.59 million sales. In their December forecast, MBA economists said they expect to see new-home sales growing to 386,000 homes in 2011 and hitting 500,000 in 2012.

Forecasters are at odds over whether mortgage rates, which hit historic lows in 2010, are now poised to climb. MBA economists are projecting higher rates — upwards of 6 percent by the end of 2012 — while Fannie Mae expects the 30-year fixed-rate mortgage to settle in at around 5 percent.

After averaging a low of 4.4 percent in the third quarter of 2010, the MBA expects to see rates on 30-year fixed-rate loans climb to an average of 5.2 percent in the first three months of 2011 and 5.5 percent in the final quarter of 2011. Mortgage rates will broach the 6 percent threshold in 2012, averaging 6.1 percent in the final three months of the year, the MBA projects.

Fannie Mae economists, on the other hand, think that rates for 30-year fixed-rate mortgages will average 4.7 percent in 2011 and 5.1 percent in 2012. Yun is forecasting that the 30-year fixed-rate mortgage will rise gradually to 5.3 percent by around the end of 2011.

Rising mortgage rates aren’t expected to crimp demand for purchase loans, but will probably spell the end of a refinancing boom that’s helped the mortgage industry weather the downturn.

The MBA projects demand for purchase loans will grow by 30 percent in 2011, to $615 billion, and by another 21 percent in 2012, to $981 billion.

But the MBA expects refinancings to drop by 66 percent in 2011, falling from more than $1 trillion in 2010 to $352 billion. Refinancings will fall another 33 percent in 2012, the MBA projects, to $237 billion.

Refinancings, which accounted for 69 percent of mortgage originations in 2010, will account for just 36 percent of residential mortgage loans in terms of dollar volume in 2011, and 24 percent in 2012, the MBA projects.

Although demand for purchase loans will grow, it won’t grow nearly fast enough to make up for the drop in refinancings.

The MBA projects that total mortgage originations — already down 24 percent in 2010 to $1.5 trillion — will fall 36 percent in 2011, to $967 billion. That would be the lowest level of mortgage originations since 1997.

Economists at Fannie Mae aren’t quite as pessimistic, predicting that total originations will fall to $1.13 trillion in 2011 ($652 billion in purchase loans plus $480 billion in refinancings).

Fannie Mae expects growth in purchase-loan demand in 2012 will more than offset shrinking demand for refis, with total originations growing to $1.2 trillion ($888 billion in purchase loans plus $308 billion in refinancings).

In a separate economic forecast, MBA analysts said they expect unemployment, which averaged 9.7 percent in 2010, to climb to 9.8 percent in the first half of 2011 before falling to 9.2 percent by the final quarter of 2011. The MBA forecasts that the unemployment rate will decline gradually in 2012, averaging 8.8 percent for the year.

Although the economy is expected to grow at an annual rate of 2.5 percent, it will take some time to create jobs to absorb the many workers seeking employment, MBA economists said in commentary accompanying their mortgage forecast.

Nearly half of those who were unemployed as of November had been looking for work for more than six months, and others who had given up looking for work or taken temporary jobs will re-enter the labor force as economic conditions improve, keeping the unemployment rate at historically high levels, MBA economists said.

Fannie Mae economists are slightly more optimistic, projecting unemployment will average 9.5 percent in 2011 and 8.6 percent in 2012. Yun thinks unemployment should drop to 9.4 percent by the end of 2011.

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