Tuesday, March 6, 2012
Anticipating the Area Spring Buying Season
It has been a long time since truly credible sources dared to combine the word ‘optimistic’ with anything like ‘Home Sales Buying Season’, but last week the National Association of Realtors’ Chief Economist, Lawrence Yun, sounded like he is ready to start talking that way.
This spring the local residential real estate outlook is being buoyed by an upward trend in the national “pending home sales” numbers. Yun points to January's pending home sales as reaching the highest level since April 2010. The number rose from 95.1% in December 2011 to 97% this January – a 2% increase in one month.
Compared year-over-year, the January home sales level rose 8%, from 89.9%. The significance may be major. Pending sales are defined as homes that are under contract but have not yet closed. They are a leading indicator of the housing market since they represent future business that will only be confirmed statistically in the months ahead.
January's figures are significant on two fronts. First, year-over-year comparisons are true apples-to-apples comparisons -- and 8% represents the kind of substantial gain that can make headlines. Moreover, the comparison to April 2010 is also encouraging.
The new figures are the highest since April 2010, and that number was artificially inflated by the rush of buyers seeking to qualify for the then-impending expiration of the homebuyer tax credit. Yun is optimistic that these newest figures will translate into what he terms a "meaningful gain" this year as the market continues to stabilize.
“Meaningful” indeed! If Yun’s projection that once credit conditions normalize home sales could rise by 15%, it will also become likely that local prices will complete their turnaround and head…well, let’s just cross our fingers and think the obvious: “UP!”