Pending home sales increased for the third consecutive month in April, up 6.7 percent from March and 3.2 percent above year-ago levels as distressed sales and record low rates boosted activity, according to the NAR.
“Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” said NAR chief economist Lawrence Yun.
“Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
Housing affordability was at its second highest level in history, after peaking in January of this year, thanks to the low mortgage rates that don’t seem to be so low anymore.
Unfortunately, pending home sales are not as effective of a measure as existing-home sales data, so the numbers must be taken with a grain of salt.
“In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” Yun said.
“Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
So with pending home sales only up mildly from a year ago, the situation isn’t as bright as it may appear.
And it certainly varies by region, with pending home sales up sizably in the Northeast, but up only marginally in the South and West regions.
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