For the first time since April 2010, pending home sales are above year-ago levels. According to The National Association of Realtors’ Pending Home Sales Index, contract signings rose 8.2 percent in May from April and were 13.4 percent above May 2010. The Pending Home Sales Index is a forward-looking indicator which reflects contracts but not closings. Lawrence Yun, NAR’s chief economist, said the improvement bodes well for home prices, as the faster inventory is absorbed, the quicker prices will stabilize. Pending sales have risen in seven of the past 11 months. More here and here.
According to The Mortgage Bankers Association’s Weekly Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 4.46 percent last week from 4.57 percent the week before. It is the lowest 30-year rate since the middle of November 2010. Despite the rate drop, total mortgage loan application volume fell 2.7 percent from one week earlier. The four-week moving average for total loan demand is up 0.7 percent, with the refinance index up 1.5 percent. More here and here.
Freddie Mac’s chief economist Frank Nothaft sees better days ahead for the economy and housing market, according to his mid-year economic update. Nothaft writes that economic growth will pick up in the second half of the year despite near-term concerns restraining consumer spending. He believes the unemployment rate will end the year near 8.6 percent and, with job gains and high housing affordability, homebuyers will return to the market with a high degree of purchasing power. Cautious consumers with the means to buy a home may be waiting for clear indication that housing has stabilized but, with a strengthening rental market, low financing costs, and less economic uncertainty, Nothaft believes growth will continue to accelerate this year and lead to an improvement in housing activity. More here.
With rents rising across the country, buying a home becomes increasingly more affordable. According to National Association of Realtors’ chief economist Lawrence Yun, buying a home is more affordable now than it has been at any time in the past 40 years. A family earning the national median of $62,000 would pay 13.5 percent of their monthly income on a median priced home, according to the NAR. Jim Glassman, senior economist at J.P. Morgan Chase, says the correction in house prices and home building is really the cure for the housing market’s problems and, as supply and demand become more balanced, the pace of the recovery will accelerate. More here.
The U.S. Census Bureau and the Department of Housing and Urban Development’s New Residential Sales Report for May shows sales of new single-family homes up 13.5 percent above last year’s estimates, despite dipping 2.1 percent from April. And though sales declined month-over-month, the seasonally adjusted annual rate of 319,000 homes was above economists’ expectations of 305,000. Also, the median sales price for a new home rose 2.6 percent in May to $222,600. The seasonally adjusted estimate of new houses for sale at the end of May was 166,000, which represents a supply of 6.2 months at the current sales rate. More here and here.