Pending Home Sales: Upward Trend Continues

5 08 2009

Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak, according to the National Association of Realtors (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6 percent to 94.6 from an upwardly revised reading of 91.3 in May; and it’s 6.7 percent above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was July 2003.

“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” says Lawrence Yun, NAR chief economist. “Activity has been consistently much stronger for lower priced homes. Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by Nov. 30.”

The Pending Home Sales Index in the Northeast rose 0.4 percent to 81.2 in June and is 5.8 percent above a year ago. In the Midwest the index increased 0.8 percent to 89.9 and is 11.6 percent above June 2008. The index in the South jumped 7.1 percent to 100.7 in June and is 8.9 percent higher than a year ago. In the West the index rose 2.9 percent to 100.4 but is 0.2 percent below June 2008.

NAR President Charles McMillan is hopeful that a recently elevated level of contract cancellations will ease. “Last month, Freddie Mac and Fannie Mae clarified that appraisals should be done by professionals with clear local expertise,” he said. “This should mitigate the situation of many valuations done by out-of-area appraisers coming in below the price negotiated between buyers and sellers. Hopefully, in the months ahead, we’ll see an even closer relationship between contract activity and closed transactions.”

McMillan said NAR is continuing to press the appraisal issue. “We have asked Congress and the Federal Housing Finance Agency to immediately implement an 18-month moratorium on the new appraisal rules to further address unintended consequences of the new guidelines,” he said.

NAR’s Housing Affordability Index remains very favorable. The affordability index stood at 159.2 in July, down from record peaks in recent months but it remains 36.6 percentage points above a year ago. Under these conditions, the typical family would devote 15.7 percent of gross income to mortgage principal and interest, well below the standard allowance of 25 percent.

The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.

“A monthly rise in home prices and somewhat higher mortgage interest rates led to a modest decline in affordability in June, but it was still the sixth highest index on record dating back to 1970,” Yun said. “Because housing is so affordable in today’s market, job security and the first-time buyer tax credit are bigger factors in influencing home sales.”

A median-income family earning $60,700 could afford a home costing $289,100 in June with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June, which was $181,600.

Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country. “It appears home sales are on a sounder footing and inventory is gradually being absorbed.”

Source: Florida Association of Realtors

City Program to Match Foreclosed Homes with Buyers

5 08 2009

The City of Jacksonville has launched a new program designed to help prospective home buyers find affordable homes by matching them with renovated homes in at-risk neighborhoods.

The $26 million Neighborhood Stabilization Program was funded through the Housing and Economic Recovery legislation passed during President Bush’s administration.

“We are excited for the opportunity to leverage federal dollars to provide hundreds of Jacksonville residents with the opportunity to own a quality, affordable home,” said Mayor John Peyton. “The NSP program is a win-win for all in that it provides developers and contractors with much needed work during this economic downturn, offers families quality affordable housing and helps further stabilize our neighborhoods.”

Developers are qualified through the program to purchase foreclosed homes in zip codes 32206, 32208, 32209, 32244 and 32254 and rehabilitate them to program standards, which include connecting to city water and sewer, installing air conditioning, carpeting, vinyl floors and Energy Star-rated appliances. All the homes must pass an environmental test and appraisals.

In order to qualify to purchase one of the homes prospective homebuyers’ income cannot exceed 120 percent of the region’s median income, they cannot currently own a home and the home they purchase must be used as their primary residence. Buyers can purchase for as little as $500 down and may qualify for up to $30,000 in down payment assistance.

For more information about the program call 398-HOME (4663) or visit

Source: City of Jacksonville Housing and Neighborhood Department

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