Posted on 06/02/2009 10:42:15 AM PDT by SeekAndFind
The number of U.S. homebuyers who agreed to purchase a previously occupied home in April posted the largest monthly jump in nearly eight years, a sign that sales are finally coming to life after a long and painful slump.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
"This is yet another positive indication that the bottoming process is forming," Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. "Now if only prices would stabilize."
Economists surveyed by Thomson Reuters expected the index would edge up to 85 from a reading of 84.6 in March.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
"The pronounced increase in April does indicate that actual existing home sales are poised to rise in the coming month or two," wrote Joshua Shapiro, chief U.S. economist with MFR.
The index was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January.
A nearly 33 percent sales increase in the Northeast and a 9.8 percent jump in the Midwest led the overall surge. Sales contracts rose 1.8 percent in April from a month earlier in the West, but fell 0.2 percent in the South.
The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February.
Since buyers need to finish their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.
Still, Yun cautioned that the pending sales data is more volatile than in the past because many sellers need banks to agree to take less than the original mortgage—a so-called "short sale." That process is often difficult, time-consuming and can wind up falling apart before the deal closes.
The Federal Housing Administration last week released details of a plan in which borrowers who use FHA loans can get advances from lenders that let them effectively receive the credit in advance, so they don't have to wait to get the money from the Internal Revenue Service.
Completed home sales rose 2.9 percent to an annual rate of 4.68 million in April from a downwardly revised pace of 4.55 million in March, the Realtors' group said last week.
Sales of inexpensive foreclosures and other distressed low-end properties have even sparked bidding wars in places like Las Vegas, Phoenix and Miami.
But the market for high-end properties remains at a virtual standstill.
The national median sales price in April plunged more than 15 percent to $170,200, from $201,300 in the same month last year. That was the second largest yearly price drop on record, according to the Realtors' group.
well, yeah, when your face down on the ground just lifting your finger is an accomplishment.
dam I hate when I do that.
That sure was nice of Obama to give people a 5.3% discount on a $150,000 home they are going to frikin' default on!!!
Those loans approved at 4.75% and not locked in may collapse after mortgage rates rose to 5.75% last week. These figures will be revised downward next month, but they make the msm delirious at the moment.
Yes indeed, 6.7% of zero is zero.
Sounds like pre-bubble babble.
4-5 years ago I remember all the real estate types here on Freerepublic swearing up and down that there was no bubble, that it wouldn’t burst, and that real estate was the only investment that has a limited supply so we better get on the bandwagon before it left town.
So, did it leave town? Did I miss it? Shucks.
That could happen. We’re trying to sell a home right now and I’m working all the extra hours I can to make ends meet to carry two homes. I hope that people continue to buy homes.
That said, what we are seeing is the beginning of the end of the worst of this housing cycle, not a recovery. (Sorry for the convoluted language.) Prices will generally fall for another year or two, and then probably stay virtually flat (adjusted for inflation) for years. That's my good scenario. I won't bother with my bad one. There will be pockets of better and worse around the country, as you are seeing now. Remember that there are several hundred submarkets in the USA. It's tough for real estate markets to improve until employment rates do. Watch unemployment rate movement by state to predict real estate recovery.
Home sales always jump around late May into June because families want to finish the kid’s school year before moving. Plus it’s easier to be moving your stuff in June instead of August. It is a seasonal bump.
Article says it’s seasonally adjusted.
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