Pending home sales edge up in February
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in February, edged up 2.1% to 82.1 from the previous month, but is still 1.4% below February 2008, the National Association of Realtors reported.
“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,” said Lawrence Yun, NAR chief economist. “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.”
Regionally, the PHSI rose 10.6% in the Northeast to 63.9 (11.2% below a year ago). In the Midwest, the index jumped 14.5% to 83.1 (3.4% higher than February 2008). In the South, the index rose 4.4% to 85.8 (0.1% below a year ago), and in the West, the index fell 13.5% to 89.6 (1.7% below February 2008).
NAR president Charles McMillan, 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.
McMillan added that this is a particularly good market for first-time buyers who can qualify for an $8,000 tax credit this year.
Also in February, NAR’s Housing Affordability Index (HAI) rose 0.9% to a record high of 173.5, and is 36.3% 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.