Joan’s Real Estate Corner… June Pending Home Sales Rise
For the second consecutive month, pending home sales figures have increased. According to the National Association of Realtors® (NAR) all regions are showing “strong double-digit” gains over last June and the index itself was up 2.4 percent for the month.
Pending sales are a healthy 19.8 percent above June 2010’s numbers. The Midwest has seen the largest rebound from 2010, increase 26.4 percent from last June. The Northeast followed at a 19.4 percent increase and the South gained 19.1 percent. The West was up 16.4 percent.
According to the NAR, “Existing-home sales this year are expected to total 5.0 million, slightly higher than 2010. Similarly, little change is forecast for aggregate home prices with several indicators, including NAR’s median prices, showing recent signs of stabilization.”
The largest regional increase month-to-month was seen in the West, which rose 6.4 percent, while the Northeast and Midwest both posted monthly declines.
Lawrence Yun, NAR chief economist, said there may be some increase in closed existing-home sales. “For the majority of transactions, the lag time between pending contacts to actual closings is one to two months. Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months,” he said. “Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations.”
The NAR also reports that credit could be a deciding factor in whether or not housing experiencing a solid recovery sooner than later. Yun noted, “The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage.”
June’s rise in pending home sales was unexpected, as economist polled by Reuters were looking for a 2 percent decline. Sales went in the opposite direction, however. The number of cancelled contracts will give a more complete picture of whether or not housing is on the mend.
Published: Realty Times, by Carla Hill, August 2, 2011
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