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Real Estate Chart of the Day
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Maybe low rates matter after all.
After months of near-4 percent mortgage rates, a bevy of housing data all points to the same conclusion -- the housing market recovery is underway.
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After 3 months of slow, steady fade, the Pending Home Sales Index rebounded sharply in October.
The index jumped 10 percent on a month-over-month basis.
A "pending home sale" is a home under contract to sell, but not yet closed. October's reading is the highest for all of 2011, and the second-highest dating back to April 2010 -- the last month of the last year's federal home buyer tax credit.
The Pending Home Sales Index is published by the National Association of REALTORS®.
If you're a home buyer or seller in San Francisco, Washington, D.C., or anywhere in between, the Pending Home Sales Index is a housing metric worth watching.
In fact, the index may give the most reliable answer to the question "How is the market?"
See, unlike the Existing Home Sales report or the Case-Shiller Index which report on past market activity, the Pending Home Sales Index is a forward-looking housing indicator. Because 80% of homes under contract close within 60 days, we can look at the Pending Home Sales Index and get a good idea for what "closed sales" will look like 2 months hence.
By region, Pending Home Sales fared as follows :
All 4 regions made year-over-year improvements which means that this year's year-end closings will be even stronger than last year's.
Seem improbable? Talk to your friends in the real estate, mortgage or title business. They'll each tell you the same thing -- December is busy, busy, busy.
October's Pending Home Sales Index foretells a strong Existing Home Sales report for November and December, but this should not surprise us.
First, home builders have been telling us for weeks that the market is strengthening. The National Association of Homebuilders reports homebuilder confidence at 18-month highs and builder report huge amounts of foot traffic -- much more as compared to even just 3 months.
Second, home supplies for both new homes and resales have dropped to multi-year lows.
And, third, although low mortgage rates don't directly cause people want to "go out and buy homes", it's definitely a factor -- especially for first-time buyers and investors with more than 4 properties.
When you can buy homes on the cheap and finance them the same, it makes for a compelling conversation.
There's a growing pool of evidence that demand for homes is rising as the stock of homes for sale is falling. It portends higher home prices ahead. The best time to buy a home may be right now.
Buying or selling a home in the next 6 months? Get a feel for what your next housing payment could look like based on today's mortgage rates.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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