Although the economy is soft and consumer confidence remains low, new data from the National Association of REALTORS® shows positive signs for the future. To help REALTORS® interpret current economic data and address clients’ concerns, here are 10 key facts to understand about today’s market.
- 1. The economy is growing, though slowly.
- 2. The private sector is finally creating some jobs
- 3. Consumer confidence remains low, though clearly off bottom.
- 4. The 30-year mortgage rate is at generational lows.
- 5. The national median-home price is stabilizing.
- 6. Other home-price measurements also are showing price stabilization.
- 7. Home price-to-income ratios have returned to fundamentally justifiable levels.
- 8. Economists expect price increases in upcoming years.
- 9. Delinquencies are high but recent loan originations are performing well.
- 10. The long-term path to self reliance may be helped from long-term housing-wealth gains.
Pending Home Sales Rise
Following a sharp drop in the months immediately after expiration of the home buyer tax credit, pending home sales have modestly risen, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator, rose 5.2 percent to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1 percent below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Yun added, “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”