Pending Home Sales Rise 2.1 Percent

Could there be positive news on the horizon?

Early this morning the National Association of Realtors (NAR) reported that its monthly Pending Home Sales Index (PHSI) increased 2.1% to 82.1 from 80.4 in January.

What does that exactly mean? Well for anyone who is selling or buying a home in most likely the worst real estate market in history…it means the quantity of resale homes put under contract rose in February after hitting historic lows in January 2009. According to the National Association of Realtors they believe “pending sales have edged up, hinting at a possible pickup of sales activity in the coming months”.

Some regions saw double digit (PHSI) gains as other regions of the United States saw mostly modest postings. The best performing area was the Midwest with pending home sales increasing 14.5%. The Northeast of the country was second in line, also noticing double-digit growth with 10.6% increase in their pending home sales. The South only rose a 4.4% modest increase, while in the West of the country matters are getting worse as their index fell 13.5%.

The NAR also released more good news, their Housing Affordability Index (HAI) increased 0.9 percentage points to a record high of 173.5 in February. The February average is a staggering 36.3 percentage points higher than a year ago.

What is the Housing Affordability Index (HAI)?
It a broad measure to determine affordability, the (HAI) incorporates the relationship between home prices, mortgage interest rates and family income.

Lawrence Yun, NAR Chief Economist, remains cautious and commented that the markets continue to underperform. Yun states “Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we’ll see additional sales gains.”

NAR President Charles McMillan says home buyers are in an excellent position. “The drop in mortgage interest rates and home prices means the buying power has never been better,” he says. This is especially true for first-time buyers who can qualify for an $8,000 tax credit this year, have a great selection of homes to choose from, and are in a favorable negotiating position.”

Could this possibly lead to price stabilization by years end in most markets? Lawrence Yun believes it can. We sure hope so…it’s time to get off this crazy roller coaster of a market and gain some stability in our lives once again!