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REALTOR®: Pending Home Sales Continue Upward Trend

Wednesday, August 5, 2009

Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May, and is 6.7 percent above June 2008. The last time there were five consecutive monthly gains was in July 2003.

Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who've been on the sidelines. "Activity has been consistently much stronger for lower priced homes," said Lawrence Yun, NAR chief economist. "Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by November 30."

Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®, the local trade association with 4,000 REALTOR® and affiliate members in the Silicon Valley region, said the increased activity is noticeable in the region's housing market.

"All the positive factors combined help attract buyers to the market, especially first-time home buyers and even repeat buyers, who see the favorable prices as a great opportunity for them to move up," Keady said.

Keady stressed it is always wise to consult a REALTOR® who is experienced with the local market and can guide buyers as well as sellers in making the decision that is right for them. "Real estate is local and it's always best to consult a professional REALTOR® who is knowledgeable about your area and can give you good advice that can lead you to make the right decision for you and your family," Keady said. "After all, buying a home is one of the most important investments you can make in your lifetime."

The Pending Home Sales Index in the Northeast rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago. In the Midwest, the index increased 0.8 percent to 89.9 and is 11.6 percent above June 2008. The index in the South jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago. In the West, the index rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.

A median-income family, earning $60,700, could afford a home costing $289,100 in June with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June, which was $181,600.

Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country. "It appears home sales are on a sounder footing and inventory is gradually being absorbed," Yun said.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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