Volume 2, Issue 12 - December 10, 2009

NAR’s Home Sales Contracts Index Increases for Ninth Consecutive Month

Americans are inking a lot of deals to buy homes. In October, the National Association of Realtors® (NAR) recorded an unprecedented ninth consecutive month of increases in the number of signed contracts. Although these are not closed sales, signed contracts are a good indicator of where the housing market is headed.

• Between September and October NAR's Pending Home Sales Index rose 3.7% to 114.1 from 110 in October.

• The index is 31.8% higher than a year ago, when it was 86.6. That's the biggest year-over-year gain in the history of the index.

NAR's chief economist, Lawrence Yun, gives much of the credit for increased sales to the homebuyer's tax credit, which first-time homebuyers could claim to reduce their taxes by up to $8,000. “The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.”

-- “Home Sales Contracts Soar in October,” by Les Christie, Dec. 1, 2009.

Report Shows a Large Drop in Home Listings

A new report that shows a large drop in home and condominium listings in the nation's biggest metropolitan areas is fueling speculation the housing market could be on the cusp of a positive trend for the new year. The drop in listings is welcomed news because it means people are buying homes. The change in the market also means those trying to sell houses are not facing the same challenging conditions as last year. According to the survey:

• The number of condo and single-family homes listed in 27 major markets dropped in November – down 28% compared to the same time last year.

• The biggest drops were made in the western United States, where listings in several major cities in California are down to more than half what they were last November. In Las Vegas, a city hit especially hard by the housing bubble, the number of home listings is down 50%.

-- “New Numbers: Is Housing Bouncing Back?,” by Mellody Hobson, ABC News, Dec. 9, 2009.

Mortgage Rates Fall to Historic Low; Applications Rise

Mortgage rates fell to a historic low last week, spurring mortgage applications and possibly home sales. Last week, the 30-year-average dropped to 4.71%, mortgage finance giant Freddie Mac said. That is the lowest since the agency began compiling its weekly survey in 1971. Mortgage loan applications during Thanksgiving week increased 2.1% on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association. "We're seeing a little bit of a frenzy. We're seeing people wanting to lock in rates immediately.”

-- Diann Patton, consumer spokeswoman with Coldwell Banker, “30-year Rates Fall to 4.71%, Elicit Mortgage Applications,” by Stephanie Armour, USA Today, Dec. 4, 2009.

Regional Update: Good News from Markets around the Nation

Denver

Metro Denver's housing market showed its first year-over-year improvement in 11 months, as the number of homes sold in November surged 23% over the same month in 2008, data released Tuesday showed. At least part of the increase was attributed to a rush by buyers to take advantage of the $8,000 federal tax credit for first-time homebuyers, but it wasn't just first-time buyers who returned to the market. The median sales price for condos and single-family homes increased, a sign that more-expensive properties were also selling well.
“An increase of 23% versus a year ago suggests that confidence levels of potential buyers are higher. Part of that is based on better economic news, and part is based on the most attractive mortgage interest rates in 40 years.”

-- Jeff Thredgold, an economist for Vectra Bank Colorado “Metro Denver housing sales surge 23 percent in November,” by Margaret Jackson, Denver Post, Dec. 9, 2009.

Phoenix

Phoenix's housing market hit bottom in early April, said Mike Orr, principal of the Cromford Report, a real-estate research firm. Based on current price trends, the housing market could start to see positive appreciation rates by March. Last month was the second-best November for home sales in the area's history. Only November 2004 was better. Meanwhile, both foreclosures and preforeclosures fell in Phoenix during November. Foreclosures dropped 21 percent from October to 3,808, according to the Information Market.

-- “Housing Business Picks up in Valley; Foreclosures Drop,” by Catherine Reagor, The Arizona Republic, Dec. 9, 2009.