No surprise here. Inexpensive homes and ultra-low mortgage rates have turned into a good thing for U.S. housing.
The nascent recovery that began last October is ongoing. The number of home resales going under contract to first-time buyers, real estate investors, and everyone else remains high. Housing has built a nice clip of momentum, from California to New York.
The Pending Home Sales Index is a monthly report from the National Association of REALTORS®. It measures the number of homes under contract to sell, but not yet sold, nationwide.
In February, the Pending Home Sales Index slipped 0.5 percent from the month prior, to 96.5.
February's reading is a retreat from January's high, but still marks the third-highest Pending Home Sales Index since April 2010, an important month in housing market footnotes. April 2010 is the month that the federal home buyer tax credit expired.
"Third-highest" isn't so terrible, either.
The top 4 months have been the most recent 4 months. The six-month trend in the Pending Home Sales Index is plainly higher. The Pending Home Sales Index is up 9% percent versus a year ago.
The Pending Home Sales Index is unique among published housing data. As such, we're compelled to analyze it differently as compared to other housing market indicators.
In contrast to the Existing Home Sales report or the Case-Shiller Index, for example, which report on past housing activity, the Pending Home Sales Index is the housing market's lone forward-looking indicator. It attempts to predict the future.
We know that 80% of homes under contract close within 60 days, for example, so when we look at the Pending Home Sales Index, it gives us a reasonable idea of what the Existing Home Sales report will look like 2 months hence.
Based on that, the spring housing market should meet analysts expectations, and may even exceed them. We can also say with near 100% certainty that this year's home sales figures will best last year's home sales by a boatload.
On a regional basis, compared to last year, contract activity is up big :
The Northeast and Midwest regions made huge gains versus last year and the South region made sizable gains, too.
This is no surprise to first-time and repeat home buyers in places like Maryland, Illinois and Georgia. There is bona fide competition for homes there. When a new home goes on the market -- if it's priced right -- it's headed under contract quickly.
There are stories of this happening in pockets of the West Region, too.
In Silicon Valley, for example, one such anecdote centers on a home receiving 30 competitive offers within a day of listing for sale. Thirty. It's an atypical outcome, but it's happening -- in California and elsewhere, too. The housing market is off its bottom.
If you're in the market for a new home, or just kicking the housing market tires, you may want to get a feel for what your mortgage payment would resemble. Start with a home purchase price, determine your probably downpayment, and use today's low mortgage rates to see how cheap your payments can be.
Home affordability remains an all-time these days. With the Pending Home Sales Index heating up, however, it points to higher home prices ahead.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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