As most of you know, I’m not a rose-colored-glasses-Realtor, more of a tell-it-like-it-is-Realtor, and that makes some call me a “pessimist” – so here’s some good optimistic news – and big yellow, non-pessimistic, crack-smoking smiley face to boot.
It’s claimed that the single most accurate forecast tool for housing activity is the “Pending Home Sale Index” compiled by the National Association of Realtors (NAR). It’s based on contracts signed – but not yet closed from around the U.S. and for some time now, the index has been either negative or flat. But the latest index, released this last Monday, was a surprise.
Instead of falling again (as predicted by Wall Street analysts) it rose by 6.3 % on sales contracts signed during April. Some of these contracts may have been buyers snapping up foreclosed properties, but there appear to be signs that buyers are slowly coming back to actually take part in our Buyer’s Market.
There’s more: The Mortgage Bankers Association of America reports that in its national survey last week, applications for new, conventional loans to buy houses jumped by eleven percent – and applications for FHA insured mortgages were up by seventeen percent.
Perhaps this is because in many major markets, price adjustments during the past two years have been significant, with prices down by 20 to 25 percent – especially in parts of California, Florida, Arizona, and Nevada.
Perhaps we’re close to that “tipping point”, where serious buyers recognize the opportunities, and start flowing back into the market. Add in low interest rates, which are still hovering close to 6 percent for 30 year loans and five and a half percent for 15 year, and you can make a pretty strong, objective case that the home price-mortgage rate equation is more favorable to buyers right now than it’s been any time in the last six or seven years.
And that’s about as optimistic as I can get right now. Not too shabby.