Another day, another strong report for housing.
The Pending Home Sales Index climbed 2 percent in December, according to the National Association of REALTORS®. A "pending home sale" is an existing home under contract to sell, but not yet closed.
The Nationwide Pending Home Sales figures are up for the fifth time in 6 months. The December reading is now its highest since the federal home buyer tax credit's April 2010 contract deadline, and the figure is well north of the Pending Home Sales Index 3-year average.
Coupling this data with December's strong Existing Homes Sales report (+12%) and its strong New Home Sales report (+17%), it's clear that the housing market has past its trough and is in Recovery Mode.
Even consumer confidence is at an 8-month high.
On a regional basis, December's Pending Home Sales Index varied as compared against November. The South region led the way, and the West region lagged.
- Northeast Region: +1.8%
- Midwest Region : +8.0%
- South Region : +11.5%
- West Region : -13.2% (Don't look at the Western Region figures as a negative sign, the economy has turned - the time to buy a home is RIGHT NOW!)
Home buyers in Idaho would do well to study last month's Pending Home Sales Index. It offers clues of what to expect during the spring buying season. For example, according to the National Association of REALTORS®, 80 percent of homes under contract close within 60 days.
Therefore, we can look at the December Pending Home Sales Index and project, with a high level of confidence, that home sales will be higher throughout February and March on a units-basis.
Furthermore, because the Existing Home Sales and New Home Sales reports show that housing stock is falling nationwide, spring buyers in Boise will notice find more competition for the available housing stock. As the Supply-and-Demand curve shifts towards sellers, home prices rise.
In other words, as the year progresses, home prices are expected to rise, as are mortgage rates. This one-two combination will impact home affordability negatively. And the higher that mortgage rates go, the worse the damage.
Your home-buying dollar won't go as far in in the second half of 2011 as it will right now. So if you have plans to buy a home in 2011, consider moving up your time-frame.