More buyers in June decided to buy a home, according to the National Association of Realtors’ (NAR) Pending Home Sales Index released today. The index, which is a forward-looking indicator of contracts signed, stands 12.4 percentage points below where it was a year ago.
However, the June reading did increase by 4.5 percentage points compared to the previous month.
“The vacillation of data from one month to the next indicates a housing market in transition,” said Lawrence Yun, NAR’s chief economist. “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”
As Yun notes, Congress and the White House did recently pass the housing rescue bill, which offers the incentive of a $7,500 temporary tax credit to those purchasing a home for the first time. But the legislation was just approved in August. That timing, and NAR data showing activity spikes in battered markets such as Las Vegas and Ft. Myers, Fla., suggests that bargain pricing—not tax incentives—lured buyers to the signing table in June.
With the housing legislation now signed into law, though, many sound more optimistic about the housing market. “Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the [Federal Housing Administration] loan program and the first-time home buyer tax credit. These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future,” said Richard F. Gaylord, NAR’s president and a broker in Long Beach, Calif.
Learn more about markets featured in this article: Las Vegas, NV.