U.S. Pending Home Sales Up from a Year Ago
Nationwide, the number of purchase contracts in July 2011 increased 14.4% from the same month in 2010. This update comes from the new Pending Home Sales Index released by the National Association of Realtors (NAR) at the end of August.
In the Midwest, pending home sales jumped 18.8% from July 2010—the second-largest year-over-year regional improvement reported by the index (the West had the biggest gains). It also had the most miniscule month-to-month decline at a less-than-one-percent decrease from June 2011 to July 2011. Overall, pending sales for the country are down 1.3% for the month.
The index is a good indicator of how many people wish to buy homes in various regions of the country. However, it only tracks the number of signed purchase contracts—offers that have been made and accepted—not actual sales that have come to fruition. So the index reveals there are more buyers showing intent to purchase properties this July than last July, especially in the Western and Midwestern parts of the nation.
Home prices did better in the early part of the summer throughout much of the country according to the latest index from Standard & Poor’s/Case-Shiller. There were price increases from May to June in all but one city monitored by the S&P/Case-Shiller index. Of these metropolitan centers, Chicagoexperienced one of the largest month-over-month home value recuperations, along with Minneapolis, Boston and Washington.
The NAR expects to see significant improvements in the housing market next year. Its forecast for 2012 includes a 2.5% median price increase for existing homes, an 18.2% rise in sales of new single-family homes, and price gains fornew homes of 2.8% this year and 3.7% the following year.
While NAR’s chief economist believes the current buyer activity is good for a real estate recovery, there is still “a question of lending standards and consumers having the necessary confidence to enter the market.” With record-setting home affordability, historic-low mortgage interest rates and soaring rent prices, it is easy to make a case for homeownership. However, it will take some time to know whether the boost in pending home sales translates to closed deals and more homes sold.