The Pending Home Sales Index, a forward-looking indicator based on contracts signed, rose 6.3 percent in December and was 2.1 percent higher than December 2007, according to new data released by NAR (the National Association of Realtors). The association’s Housing Affordability Index, which shows the relationship between home prices, mortgage interest rates and family income, rose 10.9 percent to the highest level on records dating to 1970.
The largest gains in pending sales occurred in the South and Midwest, which also experienced the biggest improvements in affordability. The index in the Midwest jumped 12.8 percent in December, but is 1.2 percent below the level recorded a year ago. In the South, the index climbed 13.0 percent and is 1.6 percent above a year ago. The index in the Northeast slipped 1.7 percent in December and is 14.5 percent below December 2007. In the West, it fell 3.7 percent but is 17.5 percent higher than a year ago.
Lawrence Yun, NAR’s chief economist, said the modest rebound was spurred by buyers taking advantage of lower home prices and low mortgage interest rates. “Significant uncertainty clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” Yun says.
In a related report, the U.S. Census Bureau finds that the U.S. homeownership rate was 67.5 percent in the fourth quarter of 2008, down slightly from 67.9 percent the previous quarter.
This report is a re-print of an article published February 3, 2009 in the MemberConnect email newsletter published by the Council of Residential Specialists.
