Archive for the ‘Pending Home Sales’ Category

Pending Home Sales Drag In January, But Should Rebound For Spring

Friday, March 5th, 2010

Pending Home Sales (July 2008-Jan 2010)

Fewer homes went under contract in January as the housing market continues to limp through the winter months.

According to the National Association of Realtors®, the Pending Home Sales Index fell to its lowest level in 3 quarters this January. By contrast, in October 2009, the index had touched a 3-year high.

The Pending Home Sales Index measures the number of homes that have gone under contract to sell, but have yet to close nationwide. It’s compiled using data from more than 100 regional listing services and 60-plus brokerages  — the sample set encompasses 20 percent of all home resales in a given month.

Economists have come to rely on the Pending Home Sales Index because of its high correlation to actual home sales. 80% of all home marked “pending” close within 60 days. Many of the rest close within 120.

Therefore, when we see Pending Home Sales show weakness like it did in January, we can infer that home resales will remain weak through the spring.

But will they really?

  1. Fewer sales should drag down home prices, bringing more buyers into the market
  2. Mortgage rates are still very low, but are poised to rise in just a few weeks
  3. The home buyer tax credit requires buyers to be in contract by April 30, 2010

In other words, there’s a confluence of factors that could lead to a rush of sales in chicago and around the country over the next two months, reversing the housing market’s recent momentum.

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Pending Home Sales Predicts A Stronger Spring Market

Wednesday, February 3rd, 2010

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 los angeles , 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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Home Buyers Get A Green Light : Pending Home Sales Plunge In November

Wednesday, January 6th, 2010

Pending Home Sales November 2009

Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November.  A “pending” home sale is a home that is under contract to sell, but has yet to close.

The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.

The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to “closed sales” within 60 days, and most of the rest close within 120.

With Pending Home Sales down, the chicago housing market should lose some of its momentum.  For today’s home buyers, this kind of slack can represent a terrific opportunity.

Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall.  The imbalance can also create a sense of urgency that results in over-paying for a home.

When buyers are sparse, on the other hand, the psychology of real estate shifts. 

Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can’t sell.  They also note a lack of general feedback from the market.

It’s at this point that seller fear can creep in and it becomes a buyer’s best time to buy.

Based on November’s Pending Home Sales data, it’s clear that home sellers are in abundance right now.  Home buyers have leverage.

It may not last.

With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business in new york and everywhere. 

Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.

The market looks ripe for a buy but don’t rush it.  Take your time and bid right. But when you’re ready, be ready — once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.

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