The Pending Home Sales Index,* a forward-looking indicator based on contract signings, eased 0.5 percent to 96.5 in February from 97.0 in January but is 9.2 percent above February 2011 when it was 88.4. The data reflects contracts but not closings.
 

Lawrence Yun, NAR chief economist, said we’re seeing the continuation of an uneven but higher sales pattern. “The spring home buying season looks bright because of an elevated level of contract offers so far this year,” he said. “If activity is sustained near present levels, existing-home sales will see their best performance in five years. Based on all of the factors in the current market, that’s what we’re expecting with sales rising 7 to 10 percent in 2012.”
 

The PHSI in the Northeast slipped 0.6 percent to 77.7 in February but is 18.4 percent above a year ago. In the Midwest the index jumped 6.5 percent to 93.8 and is 19.0 percent higher than February 2011. Pending home sales in the South fell 3.0 percent to an index of 105.8 in February but are 7.8 percent above a year ago. In the West the index declined 2.6 percent in February to 99.3 and is 1.8 percent below February 2011.

The Texas Association of REALTORS® provides media outlets with the Texas Quarterly Housing Report, which reflects what's going on in 47 of the state's markets.

The latest report shows that real estate prices during the second quarter of 2011 indicate strength in the Texas market:
The median price was $150,400, 1% higher than the same quarter of 2010. The average price in 2011-Q2 was $201,288, 4.6% higher than 2010-Q2.

The increase in the average price of Texas homes indicates more activity among higher priced homes. Buyers of higher priced homes have been less affected by tightened mortgage lending standards, and real estate has been an attractive investment vehicle due to instability in other investments, such as securities.

Another important market indicator is the inventory of homes available for sale compared with the demand to buy homes. Measured in months, Texas had 8.1 months of inventory in the second quarter of 2011 compared to 7.2 months in Q2-2010. This is still fairly balanced, with some of the additional inventory believed to be banks resuming foreclosure proceedings.

The Pending Home Sales Index, which reflects contracts signed but not closed, rose 2.1 percent in February from the previous month, but was 8.2 percent below February 2010, NAR reported today. Since bottoming out in June 2010, pending home sales have risen steadily and are now 20 percent above the low point following the expiration of the homebuyer tax credit.

In the Northeast, pending sales fell 10.9 percent in February and are 18.4 percent below a year ago. In the Midwest, pending sales rose 4.0 percent during the month but is 15.9 percent below February 2010. Pending home sales in the South rose 2.7 percent, but are 5.3 percent below a year ago. In the West, pending home sales increased 7.0 percent and is 0.6 percent above the index posted a year ago

2010 has been a year of real estate contrasts. While many consumers have taken advantage of historic buying opportunities and the market has seen a gradual stabilization of sales and prices, other challenges facing the nation have led some to question the value of home ownership for families, communities, and the country.


“People are passionate about the American dream of home ownership, and this passion underscores how important home ownership is to our nation,” said National Association of REALTORS® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Owning a home has long-standing government support in this country because home ownership benefits individuals and families, strengthens our communities, and is integral to our economy. As we begin a new year, REALTORS® remain committed to ensuring that our public policies promote responsible, sustainable home ownership for all of our futures.”


In the first half of the year, the extended $8,000 first-time home buyer tax credit and expanded home $6,500 tax credit for repeat buyers helped encourage sales and stabilize home prices. Home buyers in 2010 have also benefited from historic affordability levels, with the combination of record low mortgage rates coupled with rising household incomes. The NAR Housing Affordability Index currently shows that a median-income family with a down payment of 20 percent has 184.2 percent of the income required to purchase a median-priced home.


“Low interest rates mean real money for today’s home buyers,” said Phipps. “Buyers who purchased a median-priced home five years ago with an FHA mortgage requiring a 3 percent down payment would have a monthly mortgage payment of $1,650. With today’s interest rates and median home prices, that same buyer would pay $1,150 per month – a $500 savings. That’s a savings of $6,000 per year.”


Despite record affordability and buyer incentives, rising foreclosure rates and concerns about proper foreclosure procedures led some to question whether owning a home was a good personal decision.


“Home ownership didn’t create the foreclosure crisis – Wall Street greed and irresponsible lending practices did,” said Phipps. “The decision to own a home is a very personal one, but over the long term, owning a home is one of the best ways to build long-term wealth, in addition to providing numerous social benefits that include reduced crime rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage might last 15 to 30 years; renting is forever.”


Government support of programs and initiatives that encourage home ownership have also been called into question. The deductibility of mortgage interest is one example, with critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while in fact, the MID benefits primarily middle- and lower income families – almost two-thirds of those who claim the MID are middle-income earners. Sixty-five percent of families who claim the MID earn less than $100,000 per year, and 91 percent who claim the benefit earn less than $200,000 annually.


“The ability to deduct the interest paid on a mortgage can mean significant savings at tax time,” said Phipps. “For example, a family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next year. That’s money they could use to pay down other debts, supplement their children’s college savings account, or put into savings themselves.”


Despite current economic challenges, most Americans still aspire to the dream of home ownership. According to a survey conducted earlier in the year by Bankrate.com, 90 percent of respondents said they had no regrets buying their current home. And just this month, a Fannie Mae survey found that most Americans – both those who currently own their homes and those who rent – strongly aspire to own a home and to maintain home ownership.


“We believe that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream, and looking forward, REALTORS® will continue to engage policymakers and industry leaders on behalf of consumers in pursuit of that goal,” said Phipps.

Pending home sales jumped in October, showing a positive uptrend since bottoming in June, according to the National Association of REALTORS®.  The Pending Home Sales Index, a forward-looking indicator, rose 10.4 percent to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.

Last October, first-time buyers were motivated to make offers before the initial contract deadline for the tax credit last November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.