The latest information from the broader housing market may be a further indication that the market is moving in a sustained positive direction, though still slow and a bit uncertain at times. Looking at some of the clear indicators will give us a better picture of the current market.
For starters, data from the National Association of Realtors® Pending Home Sales Index shows that pending home sales have held steady according to the latest monthly data available, edging up just 0.3 percent to 99.5 from the previous months 99.2. However, this figure is 14.5 percent above the same period one year ago, a more substantial looking increase.
The NAR states that this continues a pattern over the past 17 months where the year-over-year figures from the index have continued to rise. The PHS Index is considered a leading or “forward-looking” economic indicator in that it reflects contract signings or pending sales, but not closings, for home purchases.
As a follow on to this, existing-home sales increased in the third quarter by 3.2 percent to a seasonally adjusted rate of 4.68 million units. This is up from the previous quarter when sales were 4.54 million. The third quarter increase reflected a 10.3 percent jump from the third quarter of last year when sales were 4.25 million units.
According to the Commerce Department new single-family home sales “surged” in September from the previous month. Commerce Department data showed that new single-family home sales increased by 5.7 percent to a seasonally adjusted average of 389,000 units on an annual rate. This was the highest sales volume in almost two and a half years.
The figures for the new home sales are clearly encouraging, along with the existing sales figures, and give further indication of a recovering housing market, but they still are only one-quarter of their volume at the peak in July 2005. Yet compared to September of last year, new single-family home sales were up 27.1 percent, an astounding increase.
Continued historically low mortgage interest rates and the unprecedented drop in home prices set the stage for possible improvements in the housing market. Stricter mandated lending regulations along with slow economic growth and high unemployment have been hindrances to a more robust housing rebound.
But that aside, a rebound is underway and proof of this is not just sales figures, but also home prices are starting to increase as well, and are doing so in a majority of the metropolitan markets.
According to Bloomberg, home prices in the third quarter rose in 81 percent of the U.S. metro markets for single-family homes. Median home sales prices rose in 120 out of 149 of these markets. This compares to price gains in 110 of these markets in the previous quarter.
The median price for single-family homes nationally was $186,100 during the third quarter; this is up 7.6 percent from the same period one year earlier.
Bloomberg noted that both foreclosures and short sales declined during the third quarter as well. These two transaction types accounted for 23 percent of the sales during the quarter; this is a drop from 30 percent in the third quarter last year, and in this case a drop is a positive number.
In regards to home prices consumer sentiment seems to be following the trend. According to a Fannie Mae survey Americans, over the next twelve months, are expecting home prices to rise by 1.7 percent. The number of survey respondents that anticipate further price declines fell to 10 percent. This figure was down from 13 percent one year earlier, and it’s the lowest figure since this survey was first released in June of 2010.
It should be noted that historically home sales will slow during the winter, so any negative changes have to be weighed with that in mind over the next several months. The full impact of hurricane Sandy will also have to be assessed in the months to come. In addition, economic uncertainty still lingers with growth only around 2.0 percent and unemployment still around 8.0 percent.
All the data indicates that the housing market has reached bottom and is now beginning a clear turn upward in most metro areas. Potential and hopeful homebuyers should jump at the opportunity to buy that next home while interest rates are at historic lows and home prices are at the bottom…but going up.