Pending home sales inch up in November

31 Dec 2014 | Author: | No comments yet »

Pending Home Sales Up In November For Third Straight Month, Says NAR.

Signed contracts for previously owned homes rose slightly in November, suggesting that the sluggish housing market strengthened a bit near year’s end. “The consistent economic growth and steady hiring we’ve seen the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” said the Realtors’ chief economist, Lawrence Yun.The number of contracts signed to buy previously-owned homes ticked up in November to hit a higher level than the previous year for the third straight month, the National Association of Realtors said Wednesday.

WASHINGTON (AP) — The number of Americans signing contracts to buy homes rose modestly in November as a strengthening economy helped nudge some would-be homebuyers. November’s PHSI inched up 0.8 percent to 104.8 in November from a slightly downwardly revised 104.0 in October and is now 4.1 percent above November 2013 (100.7)—the highest year-over-year gain since August 2013’s level of 5.6 percent. According to Freddie Mac, at 3.87 percent, the average 30-year mortgage rate dropped 65 basis basis points (0.65%) in 2014 en route to a near 20-month best. Until then, contract signings had been down on a year-over-year basis since September 2013, when rapidly rising prices appeared to slow the pace at which Americans were purchasing homes. After a two-year rebound, housing demand faltered in the middle of 2013 amid inventory shortages, rising prices and a sudden increase in mortgage rates.

NAR forecast total existing-homes sales this year to be around 4.94 million, which would be a three percent decline from last year’s 5.09 million, but the trade group predicts a 2015 rise to 5.30 million. Yun indicated that falling gas prices will also help consumers save for a down payment and also boost sales, as will the opportunity to put down less money on a home. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.

A NAR survey released last month showing that median down payments ranged from 6% for first-time homebuyers to 13% for repeat buyers. “There’s still misperception out there that a much higher down payment is needed, while that’s not the reality,” Yun says. Pending sales reached their highest level in the South since July 2013, and the seasonally adjusted index for that region has been higher in only three other months since the housing bust began in 2007. Lawrence Yun, NAR’s chief economist, credited a growing confidence in the economy for fueling these numbers—and speaking of fuel, Yun added that the recent plummet in gas prices should enable potential homebuyers to save more money for their downpayments.

Economists consider NAR’s pending home sales report a more timely housing market indicator than others because it is based on contracts signed rather than closed transactions. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading.

Separately, RealtyTrac released its November 2014 Residential & Foreclosure Sales Report, which found the median sales price of U.S. single family homes and condos in November was $190,000, a 15 percent increase from a year ago but somewhat flat compared to one month earlier. Most housing market metrics reveal how the housing market performed during some historical period — whether one month or one year ago, as two examples. Those re-sales dropped more than forecast last month to a 4.93 million annual pace, the weakest reading since May and down 6.1 percent from a 5.25 million pace in October, NAR data showed last week.

The combination of short sales and distressed sales accounted for 12.6 percent of all residential property sales in November, down from 13.7 percent the previous month and down from 14.8 percent in November 2013. We saw strong price appreciation in Rust Belt cities like Detroit, Cleveland and Chicago contrasted with single-digit price appreciation in many coastal California markets, Phoenix, Las Vegas, and the District of Columbia.” The U.S. economy that has generated 2.65 million new jobs so far this year, and the unemployment rate has dropped to 5.8 percent from 6.7 percent at the start of 2014.

Pending contracts for existing homes increased in November in the Northeast (up 1.4% above October), South (by 1.3%), and West (by 0.4%), but fell on a monthly basis in the Midwest (by 0.4%). The good news for today’s home buyers is that there are a bevy of low- and no-downpayment mortgage programs to complement the 20% down programs made available via Fannie Mae and Freddie Mac. Plus, Fannie Mae has just released a update to the Conventional 97 program, which can be combined with a gift of downpayment to get to “no money down”. 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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