Pending home sales jump 6.3% in April!

Index of homes under contract rises to the highest level since October, Realtor group says.

NEW YORK (CNNMoney.com) -- The number of homes under contract to be sold rose unexpectedly in April as buyers go bargain hunting, according to a report released Monday.
Pending Home Sales Index from the National Association of Realtors (NAR) rose to 88.2 in April, up 6.3% from March's reading of 83 and the highest level since October. The increase defied the consensus estimate of economists polled by Briefing.com, who had expected pending sales to fall by 1%.

Despite the increase, April's reading remains down 13.1% from the same period last year, and down 29% from the index's peak in April 2005. The Pending Home Sales index debuted in 2001, and a reading of 100 is equal to results that first year.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," said Lawrence Yun, chief economist for the NAR in a statement. The Pending Home Sales Index was strongest in the Midwest, where it jumped 13%, and weakest in the Northeast, where it declined 1.9% The positive report indicates that the decline in home sales may be starting to slow. "Existing home sales have started to form what looks like a bottom," said Adam York, an economist with Wachovia Corp.

However, one bullish report hardly signals the resurgence of the battered housing market. "You have to see a stability in prices and inventory before you say the market has turned a corner," cautioned Asha Bangalore, economist with Northern Trust Co. The trade group's Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR's closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing sales contract is signed.

Homes are biggest bargain since 2004!

NEW YORK (CNNMoney.com) -- With prices crashing around the nation, home price affordability has improved dramatically in many U.S. cities.

As a result, 53.8% of all new and existing homes sold nationwide during the first three months of 2008 were affordable to families earning the median household income of $61,500, according to the latest Housing Opportunity Index released Tuesday by Wells Fargo and the National Association of Home Builders (NAHB).

That's up from 44% during the first three months of 2007 with home prices the most affordable they've been since the three month period that ended June 30, 2004.

"Three factors combined to substantially increase housing affordability," said NAHB president, Sandy Dunn, in a press release accompanying the report. "Mortgage rates returning to near the record low levels of a few years ago, a $2,500 rise in family income nationwide (from 2007 to 2008) and lower house prices."

Home prices dropped about 8% compared with a year ago, according to NAHB, but that doesn't mean that buyers are flocking back to the market. "This measure can only take you so far in implications for the market," said Dave Seiders, NAHB's chief economist. "There're several factors that the index does not capture."

These include buyer expectations. Many are reluctant to act in falling markets. That sentiment can contribute to market overshoot, according to Seiders, in which prices fall lower than would be their logical bottom.

Richard DeKaser, who, as chief economist for national City Corp., runs his own affordability studies, pointed out that three main factors influence housing market trends: demographics, like more families moving into an area attracted by jobs; sentiment, the perception that the housing market is a good investment at any point in time; and affordability.

"While affordability is an important factor that will contribute to recovery of housing markets eventually," he said, "improved affordability is unlikely to lift markets out on its own."

Consumers Ogling Home Prices

More good news!

The percentage of consumers who believe homes are attractively priced has increased to a record high even as concerns about higher prices for other items has dropped overall consumer confidence to lows not seen since the early 1980s, according to a University of Michigan index. "Buying conditions for homes improved, reversing much of the decline registered in March, as a record-high 58% of respondents felt that prices were low and good buys were available (interestingly, borrowing costs and credit conditions were viewed less negatively)," said RBS Greenwich Capital strategist Michelle Girard in a report on the university's consumer sentiment index.

If you're thinking about making a purchase, it probably makes sense to stay ahead of the curve.  It won't be long before buyers start flooding back into the market and prices jump...

JH

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Buyers Getting Serious

We are seeing a dramatic change in the South Florida real estate market of late.  Prices in Palm Beach County have RISEN two months in a row – that's right, risen.  Of the last five purchase deals Ocean Trust has closed, four of them have been cash contracts, and three of those were for $1MM or more!  On the finance side, appraised values have been coming in OVER contract price. 

In the broader market, we are seeing volatility and upheaval.  The US dollar is weak against the Canadian dollar and the Euro.  More and more lenders are cooperating with realtors in negotiating short sales.  The stock market is going through very turbulent times.

What does all this mean?  It may be too soon to say that the downturn is over and that the real estate market will return to a more normal market.  But these are significant events and, I believe, reasons for optimism.  In SoFl, what I think that we are seeing is the early signs that the "smart money" is coming back.  With sellers now pricing property realistically and banks getting ready to unload their REO, combined with still historically low interest rates, this year we will see serious buyers taking advantage of opportunities that may never be seen again.

JH

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