Median Home Sale Prices are Up, Number of Homes to Choose From Still Declining

Real estate sales in Essex County were strong in the 2nd quarter of 2014, with median prices up 1.9% over last year. The number of closed sales is down, but that's a reflection of the drop in inventory from 2013 - ie: the number of homes on the market for buyers to choose from. 

Until there are more sellers taking advantage of this great selling market, the number of sales will continue to suffer. 

The Median sale price is up more than $100,000 over the 1st quarter of 2009.

- Jim Armstrong

President/Broker

Armstrong Field Inc

Click Graphic to Enlarge

Still a Short Supply of Homes For Sale

   The supply of homes for sale in Essex County is still at extremely low levels, even though this is the time of year we typically see the inventory levels climb. Having a 5-6 month supply of homes up for sale is considered a "normal" market. Anything about that and we have a buyer's market, and below is a seller's market.
   In Essex County there is currently a 2.2 month supply of single family homes on the market, making it a strong Seller's market. The same holds true for condos (2.7 months and multifamily homes (2.1 months).

What that means for home owners is that this is the perfect time to sell. For more information, go to:

http://witchcityhomes.blogspot.com/2013/05/do-you-want-to-sell-your-home.html

DO YOU WANT TO SELL YOUR HOME?

    The last few years were a rough time in the real estate market, especially if you wanted to sell your home. Over the last year things have been slowly getting better, with 2012 home prices in Salem increasing about 3.5% over 2011.  However, no one predicted the turnaround that happened during the late winter and spring of this year.

    Potential home buyers who have been waiting on the sidelines are finally realizing that prices are rising, and mortgage interest rates, although still at record lows, are bound to start rising. The number of homes on the market have been steadily decreasing during the last two years, to the point where it can be very difficult for a buyer to find exactly what they are looking for in a home. There have been numerous bidding wars on homes that were priced right and in a good location.
    What that means to the home owner who has been waiting to move is that now is the perfect time to sell your home. This spring we are seeing homes selling for more than 10% over what they would have sold for last year, and in half the time!

You may want to ask: "If prices are going up, why don't I just wait until next year and then I can get more money for my home, right?"

    There are a couple of things to think about if you want to "wait & see what happens". First, the market right now is very unusual. Low inventory combined with high demand equals higher prices. It's basic economics. But all it takes to change this "perfect storm" we are currently experiencing is for a lot more people to place their homes on the market. If the market gets flooded with homes for sale it can even drive prices down again.

Also, there is the misconception that if you wait a year or two until prices increase then you will have more money (home equity) to put down on a new home. Let's look at this situation - the difference between selling your home now and selling your home in a year if prices have gone up 10%.

	2013	2014
Your Home's Sale Price	$300,000	$330,000
Cost of Your New Home	$400,000	$440,000
Difference	$100,000	$110,000

    What you see in the above example is that your new home will actually cost you $10,000 if you wait for prices to go up. Yes, you will get more money for your home, but remember that the home you buy next year is also going to be higher in price. If you can buy your new home now and wait to sell your current home by renting it out to cover all your costs  (mortgage, taxes, insurance, water, sewer, etc.) then it might make sense. Otherwise, you are better off selling now while the market is hot.
    Mortgage interest rates will almost certainly rise by next year and add even more to your costs if you wait to sell. You could actually end up paying hundreds of dollars more each month for your new home next year than if you had purchased it this year at the current record low interest rates. Let's take the above example and see what our mortgage payment would be in each scenario based upon interest rates going up just 1% over the next year.

	2013	2014
Cost of Your New Home	$400,000	$440,000
20% Down Payment	$80,000	$88,000
Mortgage Amount	$320,000	$352,000
Interest Rate	3.75%	4.75%
Monthly Mortgage Payment	$1482	$1836

   As you can see you could be paying over $350 more per month for the same home in 2014 over 2013. Of course, all these examples are based upon speculation of what is going to be happening with the real estate and financial markets. Though we deal with both these markets on a daily basis, we do not claim to be able to predict whether they will go up or down, but can only give our best guess based upon all the stats available to us.
We would love to sit down with you and talk about whether it makes sense for you to sell your home now, or maybe wait awhile. We have been serving the North Shore community for a long time, and pride ourselves on the no obligation, no pressure information we provide. Contact Jim Armstrong - 978-394-6736 or fill out this contact form 

Seller’s Market Developing in Much of the U.S.

DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 22, 2013

Existing-home sales edged up in January, while a seller’s market is developing and home prices continue to rise steadily above year-ago levels, according to the National Association of REALTORS®. Sales rose in every region but the West, which is the region most constrained by limited inventory.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.4 percent to a seasonally adjusted annual rate of 4.92 million in January from a downwardly revised 4.90 million in December, and are 9.1 percent above the 4.51 million-unit pace in January 2012.

Lawrence Yun, NAR chief economist, said tight inventory is a major factor in the market. “Buyer traffic is continuing to pick up, while seller traffic is holding steady,” he said. “In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We’ve transitioned into a seller’s market in much of the country.”

Total housing inventory at the end of January fell 4.9 percent to 1.74 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace, down from 4.5 months in December, and is the lowest housing supply since April 2005 when it was also 4.2 months.

Listed inventory is 25.3 percent below a year ago when there was a 6.2-month supply. Raw unsold inventory is at the lowest level since December 1999 when there were 1.71 million homes on the market.

“We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth,” Yun explained.

The national median existing-home price for all housing types was $173,600 in January, up 12.3 percent from January 2012, which is the 11thconsecutive month of year-over-year price increases; that last occurred from July 2005 to May 2006. The January gain is the strongest since November 2005 when it was 12.9 percent above a year earlier.

Distressed homes — foreclosures and short sales — accounted for 23 percent of January sales, down from 24 percent in December and 35 percent in January 2012. Fourteen percent of January sales were foreclosures and 9 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in January, while short sales were discounted 12 percent.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.41 percent in January from a record low 3.35 percent in December; it was 3.92 percent in January 2012.

See the rest of the article at: Seller’s Market Developing in Much of the U.S.

Hanging Off The Fiscal Cliff? What Will 2013 Bring To The Massachusetts Real Estate Market?

High Anxiety Heading Into 2013 - by RICH VETSTEIN on DECEMBER 9

The term Fiscal Cliff should be as ubiquitous as “Merry Christmas” and “Happy Holidays” through the year-end, especially if President Obama and Congress cannot work out a deal to resolve the more than $500 billion in tax increases and across-the-board spending cuts scheduled to take effect after Jan. 1, 2013. If there is no deal, and the country goes over the fiscal cliff, the consensus is that it will have quite a negative effect on the economy and the real estate market in particular. (I debated using the word “disastrous” because there is a segment of commentators who say the housing market may survive a fall off the cliff).

There are four particular aspects of the Fiscal Cliff which could impact the real estate market.

Read the rest of the article here:Hanging Off The Fiscal Cliff? What Will 2013 Bring To The Massachusetts Real Estate Market?

Don't Count on Election to Boost Housing

The last economic data to be released before the election has given no advantage to either candidate. We did pick up171,000 jobs in October, a little better than forecast, and revised up another 84,000 in prior months.

However, the average workweek was unchanged for the fourth month in a row, and hourly earnings fell slightly, over the last year rising only 1.6 percent. "U-6" -- the measure of unemployment including "involuntary part-time" -- is still 14.6 percent.

On net a brighter sign than the jobs report: the ISM survey of manufacturing in October crawled 0.2 further into positive ground at 51.7.

Markets are flat, I think suppressed more by the election than anything, although stocks are clearly hurt by diminished earnings. Foreign action has also been muted and deferred by our election, especially in Europe.

So, Wednesday morning -- assuming we know the election results by then -- how will events and markets break from months of unnatural quiet?

1. We'll know by then. The 2000 election was a coin toss like this one, but the damned thing won't land on its edge again ... not twice in four tries.
See the rest of the article at Inman News: http://www.inman.com/buyers-sellers/columnists/loubarnes/dont-count-election-boost-housing

Price Gains Lift 400,000 Homes Above Water

Home price increases helped more homeowners regain some equity in their homes during the second quarter, according to an analysis by Zillow.

Zillow's Negative Equity Report estimates that 30.9 percent of homeowners with mortgages owed more than their homes were worth at the end of June, down from 31.4 percent at the end of March. That translates into 15.3 million underwater homes -- about 400,000 less than three months before.

The report -- which compares Zillow's automated home valuation "Zestimates" for individual homes with actual mortgage loan balance data from TransUnion -- showed all but one of the 30 largest markets tracked by Zillow saw a quarter-over-quarter improvement in their negative equity rate.

In the Boston area, the percentage of homes under water was significantly less than the national average, with only 19.6% of homeowners having negative equity. That's down from 22% at the end of the 1st quarter of 2012. That means over 80% of people have equity in their homes in this area - great news if you are planning on selling your home soon.

See the entire article at:
Price gains lift 400,000 homes above water | Inman News

Home values rise for the first time in five years

NEW YORK (CNNMoney) -- Home prices hit a bottom and are finally bouncing back, according to an industry report released Tuesday.

Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter.

See the rest of the article at: Home values rise for the first time in five years - Jul. 24, 2012

Case-Shiller Home Price Index Up Sharply

Home prices rose sharply in May cutting the year-year drop in prices to 0.7 percent from 1.4 percent in April, Stand & Poor’s reported Tuesday in its Case-Shiller Home Price Index. Prices in the 20 cities surveyed rose 2.2 percent month-month, the strongest month-month gain since the 20-city index began in January 2000.


See the Case-Shiller home price report here.

March 2012 Home Prices Up 2.5% over 2011

March 2012 existing home prices were up 2.5% over the same period in 2011. The number of homes sold was also up 5.2% over last year, but down from February 2012.

 We have recently been seeing inventory levels of real estate for sale in Massachusetts lower than they have been in a long time, which can make it a little more difficult for home buyers to find exactly what they are looking for. When they do find it, chances are there are several other buyers looking for the same property. This creates competition, hence we are seeing slightly higher home prices. We are seeing more bidding wars going on and more properties being sold over asking price. Mind you, these are the properties that are priced correctly for the market in the first place.

With the number of home buyers out there, if you are selling your home and you do not receive an offer on your property within 30 days, then it is overpriced. In fact in most cases, if you do not receive an offer on your home within 2 weeks, chances are that your home is not priced correctly. Today's home buyers are very knowledgeable about where property prices should be. On the average, they will take 45-60 days doing research online before they even go out to look at their first home. If your property is not priced right, you lose that buyer, who will most likely buy something else before you adjust your price to the correct market value.

Most people don't realize that pricing is part of real estate marketing. In fact, it is the most important part. If you do not price your home correctly I don't care how much promotion & advertising you do - it is not going to sell. Look at any other product for sale. Pricing is critical to it's success. Of course pricing a home, especially in this market,  is a lot more difficult than setting a price for most products because every property is different. That's why I say that determining the value of a home, either through an appraisal or a market analysis, is 75% science and 25% art. A lot depends on the knowledge of the individual performing the valuation, and the market conditions.

Jim Armstrong

Massachusetts Pending Home Sales Continued Positive Trend in March for 11th Straight Month

First month since June 2011 to go over 4,000 homes mark WALTHAM, Mass. – April 10, 2012 – The Massachusetts Association of REALTORS® (MAR) reported today that the number of single-family homes put under agreement in March went up again for the 11th straight month compared to the same time in 2011. Condominium pending sales were also up from the same time last year. Pending figures are a leading indicator of actual housing sales in Massachusetts for the following 2-3 months. “Activity in the market place continues to build as reflected in the number of homes that went under agreement in March,” said 2012 MAR President Trisha McCarthy, broker at Keller Williams Realty in Newburyport. “We are taking important steps towards market recovery with each successive month of increased pending sales.” The number of single-family homes put under agreement in March was up 38.8 percent compared to the same time last year (*3,256 homes in 2011 to 4,519 homes in 2012). This is the 11th straight month of year-over-year increases and the first month since June 2011 to go over the 4,000 homes under agreement mark. This month also had the most pending sales in March since MAR has been tracking the data. On a month-to-month basis, single-family homes put under agreement went up 34.2 percent from 3,368 homes in February. The number of condos put under agreement in March was up 30.4 percent compared to March 2011 (*1,422 units in 2011 to 1,854 units in 2012). On a month-to-month basis, condos put under agreement were up 45.2 percent from 1,277 units in February. About Pending Sales: The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months. A pending sale or a sale “under agreement” is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such. MAR is the only organization which compiles this statewide information from Multiple Listing Services each month. http://www.marealtor.com/content/NewsTicker.htm?view=38&news_id=1786&news=31

Massachusetts Pending Home Sales Up for 10th Straight Month in February

WALTHAM, Mass. – March 13, 2012 – The Massachusetts Association of REALTORS® (MAR) reported today that the number of single-family homes put under agreement in February went up again for the 10th straight month compared to the same time in 2011. Condominium pending sales were also up from the same time last year. Pending figures are a leading indicator of actual housing sales in Massachusetts for the following 2-3 months.

“This was the largest year-over-year increase in pending sales since we’ve been tracking this data,” said 2012 MAR President Trisha McCarthy, broker at Keller Williams Realty in Newburyport. “Buyer confidence continues to grow and the numbers confirm what REALTOR®-members across the state have been reporting; they’re busy. If these pending sales hold together through closing, we have the potential for impressive increases in April and May closings.”

The number of single-family homes put under agreement in February was up 44.2 percent compared to the same time last year (*2,335 homes in 2011 to 3,368 homes in 2012). This is the 10th straight month of year-over-year increases. This was the largest year-over-year increase since MAR has been tracking this data. Prior to the previous record in January 2012 (39.4 percent increase), the largest increase year-over-year was 32.3 percent in April 2010. On a month-to-month basis, single-family homes put under agreement went up 18.3 percent from 2,846 homes in January.

The number of condos put under agreement in February was up 35.3 percent compared to February 2011 (*944 units in 2011 to 1,277 units in 2012). On a month-to-month basis, condos put under agreement were up 20 percent from 1064 units in January.

About Pending Sales:
The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months.

A pending sale or a sale “under agreement” is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such. MAR is the only organization which compiles this statewide information from Multiple Listing Services each month.

About the Massachusetts Association of REALTORS®:
Organized in 1924, the Massachusetts Association of REALTORS® is a professional trade organization with more than 18,000 members. The term REALTOR® is registered as the exclusive designation of members of the National Association of REALTORS® who subscribe to a strict code of ethics and enjoy continuing education programs.

*Please note: As of January 2012, all 2011 pending home sales data has been updated to reflect new collection methods from the three REALTOR® affiliated Multiple Listing Services in Massachusetts via 10K Research and Marketing.

http://www.marealtor.com/content/NewsTicker.htm?view=38&news_id=1777&news=31 

Home Affordability Climbs to its Highest Level Ever

The National Association of Home Builders/Wells Fargo Housing Opportunity Index came out with the latest figures for housing affordability. Housing affordability rose to a record high during the fourth quarter of 2011, which means a home buyer’s purchasing power is greater than it ever has been before.

The index showed that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, according to the index. That marks the highest percentage recorded in the index’s 20-year history.

"While today's report indicates that home ownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels," says Barry Rutenberg, chairman of the National Association of Home Builders.

See more here: http://realtormag.realtor.org/daily-news/2012/02/17/housing-affordability-reaches-new-records

Home Affordability Offering Up 40-Year Deals

   Home affordability is at 1971 levels, due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD). Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.
 "With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households," Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. 
    However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership.
http://realtytimes.com/159/JimArmstrong

Questions About Market Value of a Home

Question: Hi Jim, Why is this house priced almost $20,000 than it's assessed for? I know they bought it on 2005 for $350,000, but at today's market it seems unrealistic. It has no garage which would have to be built! I know this is not your listing, but do you know anthing else about it? It's been on the market since November 2011 and already has been reduced, but I believe it is not enough of a reduction. Thanks so much. - Kathy
In reference to the follow property: http://www.afhomesearch.com/properties/Danvers/Wadsworth-St/2850427

 Answer: Kathy,

The assessed value of a home has no relationship to the market value of a homes. The way the town determines assessed value differs from the way a Realtor or an appraiser determines value because it is done for tax purposes. Plus, assessments are usually 2 years behind market value, and many times don't include any recent upgrades.

This particular home is actually under agreement, but they are continuing to show it for back up offers. It is a short sale, which means they are selling it for less than what the seller owes to the mortgage holder. According to public records, the seller still owes more than $300,000 to the lender. There no way of knowing what the current offer is on the property, but it is property close to the current list price.

No, it doesn't have a garage, but that doesn't matter to many people. It is in a nice neighborhood, has a good size lot, and has no neighbors in back of the property, so it is a desirable home. It is also in very good condition and shows very well, which many buyers are willing to pay a little more for. The inventory of available single family homes on the North Shore is actually quite low right now, partially due to the time of year, but also because the market is very busy. This is keeping home prices stable, and in some areas we are even seeing slight increases in value. Danvers, MA only saw a 1.45% drop in home prices in 2011, and most of that happened at the beginning of the year. Towards the end of the year the prices were starting to edge up.

I am always available to answer any questions you might have. It doesn't matter if I am the listing agent or not. Let me know if you would like to see any home on the market.

Thanks.

Jim Armstrong
Broker/President
Armstrong Field Real Estate
Mobile 978-394-6736

Boston among cities set for a real estate rebound

The New England hub has a low 5.7 percent unemployment rate thanks to the presence of more than 100 universities and colleges in the metro area and a variety of biotech and financial services companies. “Income is well above average. The housing boom was mild, with a 16 percent rise in prices followed by a 10 percent drop. The recession also was mild, with jobs down just 2 percent,” explains Winzer. Clear Capital and Trulia also have positive forecasts for Beantown this year

See the entire article at: San Jose, Boston among cities set for a real estate rebound

The North Shore Massachusetts Real Estate Market in 2012

Where is real estate going in 2012?

I know everyone gets confused by all the real estate news that you read about almost every day with each report contradicting the other. Each author usually has an ultimate agenda when writing an article. Those who make their living in real estate try to paint a good (or not so bad) picture of the market because they want to encourage people to buy or sell a home. On the other hand the typical reporter working for a newspaper wants to attract viewers to his/her article, and nothing does that better than doom and gloom - bubble bursting, rising foreclosures, etc. When reading these articles, if you are interested in what is happening with your north shore home's value, or want to know if now is a good time to buy in Massachusetts, then ignore all the national statistics. What is happening in Nevada, Michigan or Florida has almost no bearing on the local market here in Massachusetts.
Trulia.com, a leading internet real estate company, has come out with its top five places slated for a quicker recovery. They are Austin, Houston, San Jose, Boston, and Rochester, NY.  The Boston area is home to the technology belt with lots of smart, well-educated people.  Highly educated, tech-savvy cities tend to push through the recovery quicker than other parts of the country. 2011 brought a stabilization of prices on the north shore, with the average home selling for $386,251, statistically insignificant from the average of $390,794 in 2010. Even though I predict it will be a robust year, watch for stable prices in 2012 as more foreclosures coming on the market, holding down any valuation increases.

Right now we currently have 5.7 months supply of single family homes on the market. A normal market is considered to have 5 to 6 months worth of inventory, so we are approaching something close to "normality". The average days on market (DOM) for sold single family homes last year was 137 days. I would like to see the days on market below 125 before I feel we are back to a normal market. During the last few years the DOM has been between 125 and 140, while during the "Home Rush" of 2000-2005 it was just 71 to 93 days. Back 15 years ago in 1997, which was what could be could a "normal" year, the average DOM was 102 days.

The total number of homes sold, down slightly last year over 2010, will increase as interest rates stay at record lows, unemployment continues to drop and job security increases, and home affordability remains the highest in decades. Buyers will step off the sidelines and into home ownership as consumer confidence returns and realize that owning is now less expensive than renting on the north shore of Massachusetts. 

Jim Armstrong

Broker/President

Armstrong Field Real Estate

Homes Sell Better in the Winter?

RedFin Corporation, a Seattle based real estate company, released some statistics on selling a home in the winter versus other times of the year. The data is from approximately 750,000 homes sold over a year across the country, and then analyzed by season. Here are the basics:

• Homes listed in the winter sell faster compared to the summer: 46 days versus 55 days.
• Homes listed in the winter are more likely to sell at all: 59.2% versus 53.1%
• Homes listed in the winter sell closer to their original list price: a drop of 2.7% in winter versus a 5.2% drop in the summer, which is more than $7,000 on a $300,000 home.

Surprised? Most people would be. But the fact is, there are less homes on the market, which means less competition for qualified home buyers. There are less home buyers in the winter, also, but the ones that are looking are the really serious buyers and not just the lookers and nosey neighbors, who we don't want anyway.

The time of year where a home sells the fastest is still the spring, spending 15% less time on the market than the median for the entire year. Winter takes second place in this category, though (over summer and fall), selling 6% faster than the median.

I'm not guaranteeing that your home will sell quicker and for more money than other times of the year... or even at all. There are too many other factors and variables that come into play to make an across-the-board statement like that. What I am saying is that in most cases, winter is NOT a bad time to list and sell your property, and if you want to sell - don't wait until spring!

- Jim Armstrong
Want to talk? Call me at 978-394-6736
Armstrong Field Real Estate

http://blog.redfin.com/boston/2011/12/should_i_wait_until_spring_to_list_my_home_-_boston_edition.html

Real Estate Facts & Figures

Below are some facts and figures about the current real estate market, and what people think about it.

• 81% of Americans view real estate as a good investment
• 78% of Americans feel that housing prices will hold steady or increase over the next 12 months.
• It is cheaper to buy/own a home than to rent in 80% of the major markets in the US.
• 25% of young Americans plan to buy a home in the next two years.
• 95% of homeowners are happy they decided to buy a home.
• First time home buyers comprise 35% of the total home sales.
• 67% of first-time home buyers said that the real estate market conditions gave them the opportunity to purchase a home sooner than expected.
• 50% of buyers found a home in a better neighborhood than expected.
• 61% purchased their home at a price better than expected.
• 43% received a mortgage interest rate better than expected.
• 69% of Americans say that now is the best time to buy a home
• 88% of people search for homes on the internet, and 40% found the home they eventually purchased on the internet.
• 87% used a real estate agent to buy a home.
• For Sale by Owner homes reach a record low, only accounting for 6% of total sales.
• The average home seller was in their home for 9 years, and had 16% increase in equity when they sold it.
• The median age of a first-time home buyer was 31. The median age of a home seller was 53
• 60% of first-time home buyers bought because they "just wanted a home of their own".
• The median down payment for first-time home buyers was 5%.

This information was compiled from two surveys, including one just released by the National Association of Realtors.

U.S. Pending Home Sales Show Significant Rebound In October

Pending home sales rose strongly in October and remain above year-ago levels, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, surged 10.4 percent to 93.3 in October from 84.5 in September and is 9.2 percent above October 2010 when it stood at 85.5. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said improved contract activity is a hopeful sign. “Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years. We hope this is indicates more buyers are taking advantage of the excellent affordability conditions,” he said.
“Many consumers are recognizing that home buyers in the past two years have had one of the lowest default rates in history. Moreover, continued inventory declines are another healthy sign for the housing market,” Yun added.

The PHSI in the Northeast surged 17.7 percent to 71.3 in October and is 3.4 percent above October 2010. In the Midwest the index jumped 24.1 percent to 88.7 in October and remains 13.2 percent above a year ago. Pending home sales in the South rose 8.6 percent in October to an index of 99.5 and are 9.7 percent higher than October 2010. In the West the index slipped 0.3 percent to 105.5 in October but is 8.1 percent above a year ago.

“Although contract signings are up, not all contracts lead to closings. Many potential home buyers inadvertently hurt their credit scores and chances of getting a mortgage through easily averted actions, such as cancelling an old credit line while taking on a new one,” Yun said. “Such actions could unwittingly prevent buyers from obtaining a mortgage if their credit score is close the margins of qualifying, or they might get a loan but with less favorable terms.”