Pending home sales have edged up, hinting at a possible pickup of sales activity in coming months, according to the National Association of Realtors®. The Pending Home Sales Index based on contracts signed in February, rose 2.1 percent to 82.1 from a reading of 80.4 in January, and just 1.4 percent below February 2008.
NAR's chief economist Lawrence Yun is hopeful the market will see more gains ahead. "Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we'll see additional sales gains," Yun said. "More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity."
The PHSI in the Northeast rose 10.6 percent to 63.9 in February, but is 11.2 percent below a year ago. In the Midwest the index jumped 14.5 percent to 83.1 and is 3.4 percent higher than February 2008. The index in the South rose 4.4 percent to 85.8 in February, just 0.1 percent below a year ago. In the West the index fell 13.5 percent to 89.6 and is 1.7 percent below February 2008.
Another piece of good news is the rise of NAR's Housing Affordability Index to a new high. NAR's Housing Affordability Index rose 0.9 percentage points to a record high of 173.5 in February from January, and is 36.3 percentage points higher than a year ago. A median-income family earning $59,700, could afford a home costing $285,600 in February 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 that amount. The affordable price is considerably higher the median existing single-family home price in February, which was only $164,600.
NAR President Charles McMillan said home buyers are in an excellent position. "The drop in mortgage interest rates and home prices mean the buying power of a typical family has never been better," he said. "If you have a good job and long-term plans, it's unlikely that you'll find a much better time to buy a home. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position."
Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®, cautioned buyers to seek a knowledgeable and experienced REALTOR® to guide them through the home buying process and assist them in arriving at a decision that is right for them.
"A REALTOR® will be able t counsel you on what you may be able to afford given your personal financial situation. It's important to have a good credit in order to qualify that loan, and after purchasing a home, maintain that credit so you can keep your home," Keady said.
NAR expects housing inventories to rise through early summer from a normal seasonal pattern of more sellers appearing in the spring. "With the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory," Yun said. "Under these conditions, we should see price stabilization in most markets by the end of the year."
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.
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