Expect to see huge increases in pending home sales across the nation in the next month and a half. Why?
The frigid winter and record setting snow falls put the freeze on real estate activity across the nation, but thawing temperatures and the expiration of the federal government’s housing incentive program are sure to drive up transactions at least through the end of April. The fact that fixed rate mortgages for 30-year conforming loans are available below 5% helps contribute to the attractiveness of buying a home.
According to the National Association of Realtors, the Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December, but remains 12.3 percent higher than January 2009 when it was 80.5. At the time of the report, NAR expected softening sales to be reported in February too, but many industry analysts expect a huge rush to purchase in the coming days.
Most of that will be based on a rush by prospective purchasers to beat the April 30, 2010 expiration of the 2009 Stimulus Package. It offers first time homebuyers an $8,000 tax credit and some current homeowners a $6,000 credit toward the purchase of a new home. The program requires that all contracts be signed by that date and closed by June 30, 2010.
This will present a paradox for many prospective purchasers because the push will reflect greater demand, especially for those properties that are “priced right.” With housing inventory levels still very high, the impression is that there is much to choose from, but the reality is that the majority of available properties are still over-priced.
Keep in mind that while pending home sales have fallen off over the winter, the numbers are significantly better than the same time last year. Don’t be surprised when you find “the” house at “the” price, that you won’t be alone.
