Was The Increase In Pending Homes Sales A Surprise?

Hi Folks,

   Glad we could all get together again this Friday...the first day of July !

   Well, the figures were just released for Pending Homes Sales, "A forward-looking indicator based on contract signings" (per the National Association of Realtors®, or NAR), and per the NAR, "Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year". To be exact, the numbers rose 8.2% from April, and 13.4% from May 2010. Was this a surprise, or was it expected...and what does it really mean?

   "Of course these figures were expected", says Galen Ward, CEO of Estately.com. Jim Kinney, a Vice President of Luxury Home Sales with Baird Warner says that the uptick in the pending numbers, "was no surprise to us as this is the prime seasonality to see an upturn--no upturn in May would be indeed very glum.". "Mays sales numbers are only representative of the "national market" (if there is such a thing) and we all now that real estate is local", per Greg Cook, a First Time Home Buyer Specialist".

   Ward says that the "The First-Time Homebuyer Credit" expired on April 30 of last year, so, "most buyers scrambled to get their offers in prior to May 1.", and Cook says that until we, "move beyond the inflated sales numbers of last years first time home buyer tax credit, we cant really tell if were better or worse year-over-year.", and adds that, "Once we move beyond those numbers (after June) the comparisons become more relevant and we might have a clearer picture of the health of our market."

   Ward extends this and adds the following comment; "Saying this year-over-year comparison is a signal of a rebounding market is akin to rewarding yourself for weighing less this May than you did last year when you were nine months pregnant."

   What does this mean? Where do we go from here?

   Lawrence Yun, NAR chief economist, said, “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”, and cautioned that job creation is critical to a solid recovery, since, "The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country".

   What are your thoughts? Is a key piece of the puzzle beyond job creation missing?

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #PendingHomesSales #Realtor #NAR #jobmarket #realestate

Will the Housing Market Recover?

Welcome to Friday!


   Can it possibly be August? It certainly is, and folks, we are still in the midst of a housing crisis. Yes, I used the word, "crisis". There are definitely markets showing signs of recovery, as we have discussed in a previous post (http://www.blogging.lease2buy.com/2010/06/foreclosure-preventionimproved-housing.html), however, the rest of the market is struggling.

   An article recently cited the "6 Reasons the Housing Market Hasn't Recovered" (with credit to Luke Mullins of U.S. News and World Report), and the reasons were:

1) Labor market
2) Household formation
3) Foreclosures
4) Tight credit
5) Falling home prices
6) Selling your other home

   Two of these I found very interesting, and the first being "Household Formation". This is an angle that I personally have never thought about before, and might I add that it is a very good observation. What the author is saying is that basically, people cannot afford to branch out and purchase a home. People have fallen on hard times, and some have moved in with friends and family. Some couples who are looking to get married and purchase a home are perhaps holding off and staying in their rented apartment until things recover. Overall, a very good observation.

   The other point was that of, "Selling your other home". This has always been a problem, but is amplified during a market with falling housing prices, coupled with falling credit scores and income (or lack thereof). When you need to sell your home before you are able to purchase a new home, this takes it's toll. People are always looking to up size, downsize, or need to sell since they are moving. As we are seeing creative real estate options becoming more mainstream, such as Rent to Own (See our recent Blog post on this: http://www.blogging.lease2buy.com/2010/06/rent-to-own-transactions-move-into.html ), this will hopefully mitigate this factor from inhibiting our recovery.

   In keeping with our discussion, next week, there will be some important numbers released, which are the Construction Spending figures on Monday, and the Pending Home Sales Index numbers on Tuesday. Let's keep any eye on these together.

   Do you have any gripes about this market? What are your thoughts?

Have a Great Weekend, and Happy Rent-to-Owning !