Friday, August 7, 2009

Pending Home Sales Hint At Housing Recovery

The increase in pending home sales for the fifth month in a row, suggests that the US housing market is gaining steam and may be on course for recovery. However, could the seasonal slowdown kill the momentum that the real estate market has has built over the past few months? Dan Rafter from Mortgage Roadmap, discusses the latest positive news from the housing market.

A rising number of U.S. residents in June signed contracts to buy homes. It's just one more piece of evidence that the U.S. housing market is finally recovering from its long slump.

And that's good news for the rest of the economy, too. Much of the fortunes of the U.S. economy are tied to the housing market. Simply put, if people are buying and selling homes — and taking out mortgage loans while doing it — the country's economy seems to hum along. When people are afraid to buy homes, and when sellers think they can't sell theirs for a fair price, the economy falters.

We've all seen that in a big way during the U.S. recession.

But, as a recent report on says, the increase in pending home sales — a pending home sale occurs when someone signs a contract to buy a home — is just the latest indication that the housing market is on the mend. We've also seen home sales rise in the last few months. We've also seen the first national rise in housing prices in three years.

Of course, this good news can all disappear quickly. Summer is nearing its end, and there's no guarantee that home sales will continue to increase through the fall and winter months. After all, home sales tend to fall a bit historically during these slower months. Will that traditional drop-off kill whatever momentum the housing industry is now seeing? Hard to tell.

We can all hope, though, that this recovery is a solid one, one that can withstand a few bumps in the road. There is a lot of pent-up demand out there for homes. That alone should be enough to propel the housing industry to a nice, steady recovery.

This post has been republished from Mortgage Roadmap, a mortgage news and analysis site.

1 comment:

AccuriZ said...

Great news or just a seasonal factor coming to play? Residential sales activity is returning to the levels of the seasonal sales market. No one should be surprised that new homes sales have increased with the incentives of the $8,000 new home buyer program and interest rates below 5.5%.

But hold on, seasonal sales activity should be up. The peak months for sales will be June, July and August. So for the next several months we should continue to see a recovery in activity. The key benchmark for recovery is the median sales price, which is still down. Once the excess building supply and foreclosure activity ( abates, this number should correct itself to higher levels of $220,000 to $225,000. This will not occur until the summer selling season of 2010.

So yes, great news, but the real recovery is still a year off.