Pending home sales improve
According to the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI), contract signings rose in March by 4.1 percent from the month prior and is 12.8 percent higher than March 2011, marking a considerable improvement. Like last month, pending home sales (contract signings) are at their highest level since April 2010.
Although most NAR reports express cautious optimism, this is one of the first times since the housing crash that the organization’s leaders have seemed confident in the impending housing market recovery.
Dr. Lawrence Yun, NAR chief economist, said that 2012 is expected to be a year of recovery for housing. “First quarter sales closings were the highest first quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he said.
The PHSI in the Northeast fell 0.8 percent in March, but has risen 21.1 percent from March 2011. In the Midwest, closings fell 0.9 percent, but are up 16.9 percent from a year ago. In the South, the PHSI jumped 5.9 percent for the month and 10.6 percent for the year, while the West saw a 8.7 percent increase for the month and a 9.0 increase for the year.
“The housing market has clearly turned the corner,” Dr. Yun added. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses.”
NAR is not alone
Zillow chief economist Dr. Stan Humphries says home values will bottom out in 2012, which is not the exact recovery NAR is now portraying (after months of what appears to us to be hesitancy to do so), but the two organizations that collect and analyze data are at least seeing a break in the clouds for this year.
“For people who have been waiting to time their home purchase close to market bottom, it’s time to start shopping,” said Zillow Chief Economist Dr. Stan Humphries. “When the bottom will hit will vary by market, and it’s nearly impossible to time a purchase exactly right. But home prices are not the only part of the equation. Buyers also should take into account the possibility that rising mortgage rates could offset any further home value declines that may occur.”
Dr. Humphries added, “From an economic perspective, the latter part of the first quarter is full of positive news as the spring selling season gets underway. While it is unlikely that national home values continue to rise at this rate through the rest of the spring and summer, it is undeniable that we are seeing sparks of life in the housing market.”