Pending Sales Rise for the Second Straight Month

I was once told by a wise man that luck doesn’t happen twice in a row. So here we go again another month of positive signs coming from the housing market. The Dow surged 214 points today, a little better than a 2.5% gain, on the better-than-expected numbers coming out of the housing market. So are you ready to get off the fence and get in the game yet? If your not there are plenty that are. Don’t let the bus pass you by again!

“If you subscribe to the theory that the global economic crisis started with the U.S. housing market and will end there, you’re going to be encouraged by reports like this that suggest housing is bottoming,” said Kevin D. Mahn, managing director at Hennion & Walsh.

The March pending home sales index from the National Association of Realtors jumped 3.2% from February, surprising economists who were looking for the index to hold steady.

Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago.

It may still take a while before the market gains enough momentum to firmly state that the downturn has been reversed, according to Lawrence Yun, NAR’s chief economist. And, the upturn may have been boosted by the first-time homebuyers tax credit, a temporary measure that will lapse in December.

“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Yun. “This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment.”

The index is understood to be a forward indicator of home sales trends since it measures contracts signed, not completed sales. The up-tick may indicate that home prices have fallen low enough for buyers to get off the fence.

Anecdotal evidence indicates that trend may be happening. Realtors and other industry insiders are seeing rising open house attendance and multiple bids on some particularly desirable properties. Plus, pricing has become sharper, according to Sherry Chris, the CEO of Better Homes and Gardens Real Estate.

“Overpricing seems to be ending,” she said. “Properties are coming onto the market and selling quickly.”

And buyers are feeling a little more urgency, she added. In many markets, buyers have not felt any pressure to make an offer. “They said to themselves, ‘I don’t have to act immediately. It will still be on the market two weeks from now,'” she said.

Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house.  This is reflected in the multiple offers that listing agents are starting to see from potential buyers. Out of the 10 plus contacts that I’ve written in the past two weeks more than 80% of them have had multiple offers. I’m talking about homes that have been sitting on the market for 6 months to the past year with no activity. It’s not just the homes in great condition that are going fast it’s the diamonds in the rough that have the greatest profit potential when the market rebounds that are flying off the shelf. The bank owned and short sales that are priced to sell.

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