Gains in Pending Home Sales, Other Markers Help Cut Housing Inventories
by Evan Vanderwey on 06/11/09 at 12:16 am
It’s now eight consecutive months that pending home sales have made gains nation-wide, the longest streak since we started measuring it in 2001. But as we’ve seen with just about every other positive economic indicator, just because the sun is shining in Texas, doesn’t mean it’s not raining here.
But hang on. As it turns out–with this stat, at least–things are looking pretty good here too. If by “here” you mean the Midwest in general. The Pending Home Sales Index is based on contracts signed in September. Nationally, this number rose 6.1% against the previous month, and is 21.2% higher than in September of last year. This is the largest annual increase on record. In the Midwest the index rose 8.1 percent and is 17.8% higher than last year. Not bad. And though foreclosures will continue to work against us, they’re coming at a slower rate. The net result? Reduced inventories.
And there are other things helping to reduce inventories: the imminent extension of the first-home-buyer tax credit (or some form of it); the extension of Freddie, Fannie, and FHA higher loan limits (just announced last week); and the release of pent-up demand as approximately three million renters have moved into the financially-qualified category as potential buyers (this according to the NAR); and now, the continued gains in pending home sales.
Collectively, these should cut into the existing inventory and act to lower supply and eventually raise home prices. We’re seeing this in other markets around the country, and where we see home prices rise, we’re also seeing more willingness on the part of lenders to underwrite. And that will happen here too, eventually.
I’m not going to say be patient, because if you’re still in this business, you learned how to do that long ago.
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