Modest near-term movement is expected in existing-home sales, with a recovery in sales seen during the second half of the year, according to the latest forecast by the National Association of Realtors®.
The Pending Home Sales Index based on contracts signed in May, fell 4.7 percent to 84.7 from April, and remains 14 percent below May 2007 when it stood at 98.5.
The NAR pending sales index seeks to measure which way the housing market is going in the future. It is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.
Some pullback after a sharp increase in the previous month was expected, according to NAR chief economist Lawrence Yun. "The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy," Yun said.
Yun said location has never mattered more than in the current market. "Some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half. Price conditions vary tremendously, even within a locality, depending upon a neighborhood's exposure to subprime loans."
MLSListings Inc., the Multiple Listing Service for the Silicon Valley Association of REALTORS® (SILVAR), shows single family home sales are continuing their upward trend in Santa Clara County. There were 927 closed sales of single family homes in Santa Clara County in June 2008, up from 873 closed sales in May 2008, 654 in April and 583 in March. The average price of homes in June 2008 was $922,149, down from $970,702 in May. During the same period a year ago, there were 982 closed sales of single family homes in Santa Clara County and the average price of homes in June 2007 was $1,066,610.
SILVAR President Leannah Hunt said today's market offers long-term value for buyers. "As home prices drop a bit, there are good opportunities out there for serious home buyers," said Hunt.
NAR reports its housing affordability index is improving this year and is likely to rise 15 percentage points to 127 for all of 2008. In May 2008, the California Association of REALTORS® reported the affordability index in California increased 18 percentage points from the same period a year ago. The percentage of households that could afford to buy an entry-level home in California stood at 44 percent in the first quarter of 2008, compared with 26 percent in the first quarter of 2007.
NAR predicts existing-home sales should increase 5 percent next year. The aggregate median existing-home price is projected to fall 6.2 percent this year to $205,300, and then increase by 4.3 percent in 2009 to $214,100. It was $218,900 in 2007.
"The speed at which home prices has declined in a few select markets is unprecedented, but the large price declines in those areas have enticed bargain hunters back into the market," Yun said.
By region, the PHSI in the Northeast decreased 2.9 percent in May from April; it had fallen 16.4 percent since May 2007. The Midwest was down 6 percent in May from April; it had dropped 13.8 percent since May 2007. The South decreased 7.1 percent in May from April; it had fallen 22.1 percent since May 2007. The West decreased 1.3 percent in May from April; it has gone up 2 percent since May 2007.
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.