sales activity in coming months, according to the National Association
a forward-looking indicator based on contracts signed in February, rose
2.1 percent to 82.1 from a reading of 80.4 in January, but is 1.4
percent below February 2008 when it was 83.3.
NAR chief economist, said the market is continuing to underperform.
“Pending home sales have a way to go for there to be a meaningful
increase, but recent increases in shopping activity are hopeful
indicators that we’ll see additional sales gains,” he said. “More
buyers are getting into the market to take advantage of stimulus
incentives and much improved housing affordability conditions, but it
will take a few months before we could see this turn up in measurable
sales contract activity.”
is 11.2 percent below a year ago. In the Midwest the index jumped 14.5
percent to 83.1 and is 3.4 percent higher than February 2008. The index
in the South rose 4.4 percent to 85.8 in February but is 0.1 percent
below a year ago. In the West the index fell 13.5 percent to 89.6 and
is 1.7 percent below February 2008.
a broker with Coldwell Banker Residential Brokerage in Dallas-Fort
Worth, said home buyers are in an excellent position. “The drop in
mortgage interest rates and home prices mean the buying power of a
typical family has never been better,” he said. “If you have a good job
and long-term plans, it’s unlikely that you’ll find a much better time
to buy a home. This is especially true for first-time buyers who can
qualify for an $8,000 tax credit this year, have a great selection of
homes to choose from, and are in a favorable negotiating position.”
record high of 173.5 in February from an upwardly revised index of
172.6 in January, and is 36.3 percentage points higher than a year ago.
The HAI, a broad measure of housing affordability using consistent
values and assumptions over time, shows that the relationship between
home prices, mortgage interest rates and family income is the most
favorable since tracking began in 1970.
$285,600 in February with a 20 percent downpayment, assuming 25 percent
of gross income is devoted to mortgage principal and interest.
Affordability conditions for first-time buyers with the same income and
small downpayments are roughly 80 percent of that amount. The
affordable price is considerably higher the median existing
single-family home price in February, which was only $164,600.
can counsel you on what you may be able to afford given your personal
financial situation. In some cases, buyers who want to build their
future through homeownership may need to start reducing their debt and
improving their credit score before entering the housing market.”
costing $265,600, which is $20,000 less than the current affordable
price. “Homes in many areas are now selling for less than replacement
construction costs – clearly this is an abnormal situation which will
change once inventory is drawn down and supply and demand come closer
into balance,” McMillan said.
from a normal seasonal pattern of more sellers appearing in the spring.
“But with the positive housing stimulus incentives now in place, we
expect home sales to gain momentum in the second half of the year with
first-time buyers absorbing a lot of the excess inventory,” he said.
“Under these conditions, we should see price stabilization in most
markets by the end of the year.”
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.
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 from 2001 through 2004
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.
during 2001, which was the first year to be examined as well as the
first of five consecutive record years for existing-home sales.
where a value of 100 means that a family with the median income has
exactly enough income to qualify for a mortgage on a median-priced
existing single-family home, taking into account the relationship
between median home price, average effective interest rate for loans
closed on existing homes, and median family income. The higher the
index, the better housing affordability is for buyers.
ratio of 25 percent of gross income for mortgage principle and interest
payments. The index is a general gauge with conditions varying widely
around the country. Affordability conditions are lower for first-time
buyers with smaller downpayments and less income.