Flagstaff Real Estate News: Pending Home Sales 6/7/10
Pending Home Sales Surge
June 07, 2010
Pending home sales have risen nationwide for three consecutive months,
reflecting the broad impact of the home buyer tax credit and favorable
housing affordability conditions, according to the National Association
of Realtors®.
In the West -- the area
that includes Flagstaff, AZ -- the Pending Home Sales Index,* a
forward-looking indicator, rose 7.5 percent to 107.9 and is 12.0 percent
higher than April 2009.
Pending home sales are at the highest level since last October when the
index reached 112.4 and first-time buyers were rushing to beat the
initial deadline for the tax credit. The data reflects contracts and not
closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second
round of surging sales from the tax credit extension looks as strong as
the original tax credit. "There were concerns that only a small pool of
buyers were left to take advantage of the tax credit extension. But
evidently the tax stimulus, combined with improved consumer confidence
and low mortgage interest rates, are contributing to surging sales," he
said.
"The housing market has to get back on its own feet and now
appears to be in a good position to return to sustainable levels even
without government stimulus, provided the economy continues to add
jobs." NAR expects a net of 1 million additional jobs in the second half
of this year and about 2 million in 2011.
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*The Pending Home Sales Index is a leading indicator for the housing
sector, based on pending sales of existing homes. A sale is listed as
pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months of
signing.
The index is based on a large national sample, typically representing
about 20 percent of transactions for existing-home sales. In developing
the model for the index, it was demonstrated that the level of monthly
sales-contract activity parallels the level of closed existing-home
sales in the following two months. There is a closer relationship
between annual index changes (from the same month a year earlier) and
year-ago changes in sales performance than with month-to-month
comparisons.
An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined as well as the
first of five consecutive record years for existing-home sales.
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