The National Association of REALTORS® reports contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.
The index in the West jumped 12.1 percent to 112.5, 20 percent above a year ago, which illustrates the strong market activity in this area, according to Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®.
"Buyers are starting to pay attention to the opportunities that are out there for them. Buying conditions are more favorable than they've been in years: home choices are abundant, affordability has improved, mortgages are available and interest rates are still low," Keady explained the favorable market conditions.
NAR chief economist Lawrence Yun said the housing market momentum has clearly turned for the better. "The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit," Yun said.
"Other buyers are taking advantage of low home values before prices turn higher," Yun explained. "Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family's monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable."
NAR estimates about 1.8 to 2 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible – it is taking approximately two months to complete home sales in the current market.
NAR is asking Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences to ensure that housing has a broad stimulus to the overall economy.
"The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy," NAR President Charles McMillan 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 email or call the SILVAR office at (408) 200-0100.