May 4, 2011 (Jeff Alan)
Lawrence Yun, chief economist for the National Association of Realtors (NAR), says existing home sales “would be stronger if tight mortgage lending criteria returned to normal, safe standards.” The statement was made in NAR’s recently released Pending Home Sales Index (PHSI) report, which stood at 94.1 in March, but was 11.4 percent lower than March 2010’s reading of 106.2.
However, the PHSI, a forward-looking indicator based on contract signing, rose 5.1 percent to 94.1 in March from 89.5 in February. NAR attributes the yearly decline to elevated contract levels in March and April of 2010 as buyers rushed to meet the contract deadline for the home buyer tax credit.
In the report, Yun states, “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own. The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”
Pending sales increased in three of the four regions with the Northeast the only region experiencing a decline. The Northeast fell 3.2 percent to 63.4 in March while in the Midwest the index rose 3.0 percent to 83.5. The South increased 10.3 percent to 110.2 and in the West the index increased 3.1 percent to 103.7.
The index in all four regions declined compared to year-over-year comparisons with the Midwest down 18.4 percent, the South is down 10.5 percent, the Midwest saw a decline of 16.6 percent and the West had the smallest decline of 4.1 percent from a year ago.
Yun also said that the good news is that recent home buyers are staying well within budget which has lead to exceptionally low loan default rates from home buyers who have bought their homes in the past two years.
Tags: NAR, PHSI, existing home sales, pending home sales, mortgage lending criteria, home buyers budgets, low default rates