Good News for People Who Like Numbers

According to the National Association of Realtors (NAR), pending home sales rose again, marking eight consecutive monthly gains – the longest streak since measurement began in 2001. You might say, "of course they rose, there's nowhere to go but up when you're at rock bottom." To that I might say, "you forget that humans invented shovels and drills and that getting UNDER rock bottom is always a possibility." Then I'd direct you to the pity party down the hall.

Here's the good stuff:
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

Lawrence Yun, NAR chief economist, said the momentum is understandable. “What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.”

NAR estimates approximately 3 million renters are now financially well-qualified to buy a median-priced home. “As long as buyers do not overstretch and stay well within their budget, a sizable pent-up demand can be tapped among financially qualified potential buyers,” Yun said. “Although the tax credit is greatly reviving the existing home market, new-home sales may continue to struggle as home builders hold back production to drive down inventory. In addition, there remains an ongoing credit crunch for construction loans.”

Yun added that strong near-term reports should not be overstated. “We’re clearly not out of the woods because an excess of homes remains on the market despite recent improvements,” he said. “Although current inventory is getting closer to price equilibrium, foreclosures will continue to enter the pipeline. [The] extended and expanded tax credit [will] help absorb this incoming inventory.”

JERRY BAKER

GMAC REAL ESTATE PROFESSIONALS

530-524-8806

JBAKER@REDDINGLISTINGS.COM