Source: Carol Riordan www.HartfordCourant.com – HomeLife
Their Pending Home Sales Index (PHSI)* showed an overall increase across the United States to an index of 96.5, a rise of 9.2 percent compared to February of 2011. In the Northeast, the index rose 18.4 percent to 77.7. The Midwest also posted large gains with a 19.0 percent increase to an index of 93.8. There was an increase of 7.8 percent in the South to an index of 105.8 and a decrease in the West of 1.8 percent to an index of 99.3.
NAR Chief Economist Lawrence Yun predicted a strong buying season based on recent monthly PHSI increases. He said, “We had a very good January, now we have a nine-percent increase in February figures. These are implying that this buying season will be a quite decent year.”
The unseasonably warm weather has encouraged people to go out and look for properties. Potential buyers are not just browsing, however, but shopping seriously for homes as indicated by a rise in realtor confidence. “Realtors are looking at some of the qualitative factors,” said Yun. “Whether or not people are returning on their open house visits; whether people are examining homes very carefully or just kicking the tires.”
Another indication of the real estate market’s recovery is declining shadow inventory which is measured by seriously delinquent mortgages and homes in foreclosure. Shadow inventory reached a high in the last quarter of 2009, but has been steadily declining since then. There has also been a decline in bank-owned properties and properties owned by the government through Fannie Mae, Freddie Mac and the Federal Housing Administration. In addition, visible inventory has reached its lowest level in the five years. “So all three buckets of potential inventory…are declining and therefore, because it’s declining consistently, it’s implying that the market is able to absorb this inventory and it’s all moving in the right direction, “said Yun.
He noted that home sales have been essentially stable since 2009 and that the recent uptick in the PHSI is noteworthy. “If activity is sustained near present levels, existing-home sales will see their best performance in five years,” Yun said. “Based on all of the factors in the current market, that’s what we’re expecting with sales rising seven to 10 percent in 2012.”
*The PHSI is a forward-looking indicator based on contract signings. The data reflects contracts, but not closings. The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. Information about NAR is available at www.realtor.org.
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