Pending Sales Up 6.3% in April

A modest gain in the level of home sales is possible over the next couple months, and an improvement is forecast for the second half of this year as more buyers are able to access affordable mortgages, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.3 percent to 88.2 from a reading of 83.0 in March. It’s the highest index since last October, but remains 13.1 percent lower than April 2007, when it stood at 101.5.

Lawrence Yun, NAR chief economist, says pending sales contracts have picked up notably in areas undergoing significant price drops.

“Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it’s unclear if they are investors or owner-occupants,” he says. “Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts.”

The Pending Home Sales Index in the West rose 8.3 percent to 98.8 in April from March, and is up 4.0 percent from April 2007. In the Midwest, the index jumped 13.0 percent to 83.7 in April but remains 13.1 percent below a year ago. The index in the South increased 4.6 percent to 88.8 but is 22.5 percent below April 2007. In the Northeast, the index declined 1.9 percent in April to 79.3 and is 12.2 percent below a year ago.

Here are some other market predictions from Yun and NAR:

• Affordability getting better. NAR’s housing affordability index has been trending up this year and is projected to rise 15 percentage points to 128.0 for all of 2008. “It appears that more buyers are realizing they can take advantage of a favorable combination of mortgage interest rates, home prices and family income,” says NAR President Richard F. Gaylord. “Overall affordability conditions are the best we’ve seen since the middle of the housing boom in 2004, but with far more choices and much less pressure than buyers experienced four years ago to make an investment in their future. Recent declines in mortgage rates on conforming jumbo loans and a return to sound but not overly stringent underwriting standards will permit more people to qualify for a loan.”

• Mortgage rates to go up. “Although mortgage interest rates will remain historically favorable, they will start to steadily inch up,” Yun said. The 30-year fixed-rate mortgage should rise gradually to 6.3 percent by the end of this year, and then hold at that level for most of 2009.

• Demand for homes only rising. Yun said the underlying fundamentals point to a pent-up demand. “Home sales are at about the same level as they were 10 years ago, yet the population has grown by 25 million people and we have over 10 million more jobs,” he said. “The housing market has been underperforming by historical standards, partly because buyers were hampered by mortgage availability issues, but that’s improved and an upturn is more likely. On the other hand, it’s unclear what role consumer confidence will play in the coming months.”

• EHS to see healthy gains in ’09. Existing-home sales should increase from an annual pace of 5.05 million in the second quarter to 5.83 million in the fourth quarter. For all of this year, existing-home sales are expected to total 5.40 million, and then rise 6.3 percent to 5.74 million in 2009. “Sales gains will be greatest in areas that underwent sharp price declines,” Yun said.

• Prices to stabilize in second half of this year. After unprecedented home price declines in the first half of the year, many markets can anticipate stabilizing price trends in the second half. The aggregate median existing-home price is likely to decline 8.4 percent in the first half of this year, and then begin to stabilize in the second half before rising 4.4 percent next year to $213,900. “Policymakers need to be attentive to the fact that many homeowners have seen a reduction in housing equity, or are in an ‘underwater’ situation. More needs to be done on the policy front to alleviate hardships and bring fence-sitters back into the marketplace,” Yun says.

• New-home sales slow to recover. New-home sales will probably fall 31.7 percent to 529,000 in 2008 before rising 12.5 percent to 595,000 next year. Housing starts, including multifamily units, are projected to drop 27.2 percent to 987,000 this year, and then slip 0.6 percent to 980,000 in 2009. “Rising construction costs will provide less room for price cuts on new homes,” Yun said. The median new-home price is forecast to decline 3.1 percent to $239,500 in 2008, and then rise 5.4 percent next year to $252,400.

• A better economic picture. Yun sees an improving economy. Growth in the U.S. gross domestic product (GDP) should be 1.7 percent in 2008 and 2.0 percent next year. The unemployment rate is estimated to average 5.3 percent this year and 5.6 percent in 2009.

• Inflation growing. Inflation, as measured by the Consumer Price Index, is expected to be 3.6 percent this year and 2.4 percent in 2009. Inflation-adjusted disposable personal income should grow 1.4 percent in 2008 and 2.5 percent next year.

Existing-home sales for May will be released June 26; the next forecast and Pending Home Sales Index will be released July 8.

— NAR

HOUSING POSTS SURPRISING REBOUND!!

April increase in apartment buildings cited. 

Washington (AP) --Construction of new homes posted the BIGGEST INCREASE in more than TWO YEARS in April.   While it was a rare spot of good news for the housing market, analysts said it's far too soon to declare an end to the prolonged slump.

The Commerce Department reported last Friday that housing construction rose by 8.2% in April to a seasonally adjusted annual rate of 1.03 million units.  Building single-family weaken, however.  The growth came from a big jump in apartment construction.

Analysts predicted the surprising rebound in April would be temporary given the head-winds builders are still confronting, from slumping slaes to soaring home foreclosures.

"It is definitely too early to uncork the champagne on the long and winding road to more healthy housing-market conditions," said Brian Bethune, an economist at Global Insight.  He said he did not expect housing activity to stabilize until the end of this year.

The prolonged slump in housing has been a major drag on the overall economy, raising worries that the country is in danger of falling into a recession.  The strength in housing construction in April came entirely from a huge increase in apartment construction, which can be extremely volatile from month to month.

Building of apartments, defined as two or more units, jumped 36% to a seasonally adjusted annual rate of 340,000 units...

Applications for building permits, considered a good sign of future activity, also recorded an increase in April, rising by 4.9% to 978,000 units.  It was the first gain inpermits in five months.

But economists believe housing construction will remain under pressure until builders have more success in reducing a huge backlog of unsold homes...

By Martin Crutsinger, AP Economics Writer, excerpts  from the Grants Pass DAILY COURIER of May 23, 2008.

5 SMART STRATEGIES FOR

ANY MARKET

Weichert Forecasts a

Housing Market on the Rise

RISMEDIA, June 18, 2008-  As president and founder of Weichert Realtors, one of the nation’s largest privately held real estate companies, James M. Weichert has seen his share of market shifts. According to the company, Weichert has become quite efficient at predicting changes by regularly studying the factors that shape the housing sector. Yet, this well-respected industry pioneer has never felt so strongly about a market shift that he would come out and declare so publicly - until now.

In a message to the company’s nearly 18,000 sales associates as well as approximately 2,000 employees, Weichert announced that “we have reached the bottom of the housing market and will soon begin to see improvements.”

“We saw an extraordinarily hot market at the start of the decade like we may never see again. I knew in May 2005 that we had reached the peak of the market when mortgage payments began to stretch beyond buyer affordability,” said Weichert. “Now, everything I am seeing is telling me the worst is behind us and we’ll begin to see a gradual increase in sales activities.”

Weichert acknowledges that the recovery will happen at slightly different times and at different rates throughout the country because real estate remains a local business. “I recognize that some areas locally and some states nationally are not there yet, but by and large, we are turning the corner.”

As is typical in real estate, the Northeast appears to be the first area heading in to a new market. In many states, home sales are increasing slightly month over month and the home supply is waning. At the same time, interest rates remain historically-low, foreclosures are on the decline and mortgage money is becoming more readily available again.

Perhaps the biggest factor Weichert feels points to a market on the way back up is the increase in buyer interest. “There is just a lot of pent-up demand right now. We are seeing more traffic to our website, more people coming to our Open Houses. Despite the downturn the past few years, life goes on. People continue to get married, have kids and change jobs and buying a new home often goes hand in hand with these life milestones.”

To support his belief that the market is now on an upswing, Weichert will incorporate in to its current print and Internet advertising a message to buyers: “You might be guessing, but we’re sure. Now is the time to buy.”

“I know there are a lot of interested buyers who have sat on the sidelines the past few years either because they lacked confidence in the market or because they were hoping to time their purchase perfectly and buy at the lowest point possible,” added Weichert. “I would tell those people there is no more reason for uncertainty or hesitation.”   

An article from RISMedia's Real Estate Magazine courtesy of Lowe's Realtor ® Benefits online.

New home sales, prices still tumbling!

Washington - Sales of new homes tumbled for the sixth time in seven months in May while median prices kept plunging, underscoring the depth of the nation's housing woes.

Economy

     The Commerce Department reported Wednesday that new homes were sold at a seasonally adjusted annual rate of 512,000 units in May, down 2.5% from the April level.  The median price of a new home sold last month fell to $231,000, down 5.7% from a year ago.  

     The report on new home activity in May follwoed reports Tuesday that showed record home price drops in April, indicating the nation's housing slump is not only deepening but also widening to include previously untouched parts of the country.

     The inventory of unsold homes rose to 10.9 months in May, meaning it would take that long to exhaust the current supply of unsold homes.  Because of the unusually high inventories, economists believe that home prices will keep falling until the spring of next year.

     The prolonged problems in housing have dragged down the overall economy, raising the risks of a full-blown recession.

     For May, new home sales were down the most in the West, falling by 11.6%.  Sales dropped 7.9% in the Northeast.  But sales posted increases in the Midwest of 5.3% and were up 0.4% in the South.

Note from Editors:  THE SCHMIDT TEAM feels that the prices of both new homes and previously owned homes in Josephine County are about as low as they are going to go NOW.  Every Seller wants as much as they can get in a sale while each Buyer wants the best 'discounted' deal that they can get.  Consequently, the offers that are coming in are almost ALL really low.  It's like Sellers don't really set the asking price for their home, the want everyone to offer them at least $20,000 less than the asking price.  BUYERS WAKE UP.  When a home has an asking price of $179,900, that is the price that the Seller WANTS TO GET for their home;  not LOWER!

Article (except for Note from the Editors) from the June 25, 2008 edition of the Grants Pass DAILY COURIER.  By:  Martin Crutsinger, AP Economics Writer.