Pending Home Sales Make Historyby Tim Manni
Pending home sales have risen once again in July, marking the sixth-straight-monthly increase — the longest streak in the index’s eight-year history:
The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.
The chief economist at the National Association of Realtors (NAR) has consistently attributed the improving real estate numbers over the past few months to affordable housing and the first-time homebuyer tax credit:
“The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said.
“Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.
Despite Washington showing little indication that they will extend the tax credit, professionals in the real estate industry continue to push for. The consensus among some is that the housing rebound will fall flat without it:
“To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences,” [NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage].
As we reminded you last month, time is running out to qualify for the first-time homebuyer tax credit. Your application must be accepted by November 30. “The mortgage process usually takes anywhere between 45 and 60 days,” said Keith Gumbinger of HSH. “If it isn’t crunch time, it’ll be here soon, especially if you’re still looking at houses. Would-be first-time homebuyers should really begin getting the process started if they haven’t already.”