Sales Contracts Rose 3.2%, Foreclosed Homes Sales Rose Too
May 5th, 2009 by 
Joseph Smith
Homebuyers have surmounted flat foreclosed home sales predictions for March, according to the National Association of Realtors’ Pending Home Sales Index. A previous survey of real estate analysts by Briefing.com predicted a flat movement in the index in March.
But contracts to sell and purchase homes, including foreclosed homes, rose in March by 3.2 percent from the February index of 82 to reach an index of 84.6, which also marked an increase of 1.6 percent from March 2008.
However, economists do not yet see an approaching end to the housing crisis. Lawrence Yun, chief economist of NAR, said it will take some time before the market levels off and marks the end of the meltdown. Yun said the increase may have been spurred by the tax credit for first-time homebuyers, a tax incentive that will expire in December.
Furthermore, Yun explained that the market needs several months of consistent growth to prove that it is recovering and that it is contributing to the economic turnaround. Housing conditions, such as the low prices of foreclosed homes, and federal and state programs have been favorable to homebuyers, especially first-time homebuyers who are benefiting from the $8,000 tax credit.
The index of pending homes measures the number of home sales agreements signed, not completed home sales, so the index should be understood as a trend indicator for home sales. Some contracts do not translate to completed sales because of failure to get financing.
Yun said he cannot yet say that prices of homes, including foreclosed homes, have reached their bottom level. He needs first to see home sales results in the summer to be able to estimate where the housing market is going.
The supply of homes in the market, including foreclosed homes, must also decline to about six or seven months of inventory before recovery can start, Yun said.
Sherry Chris, chief executive of Better Homes and Gardens Real Estate, said he has been seeing signs pointing to an approaching recovery. Open houses are being deluged with prospective buyers and multiple bids are being offered for some attractive properties.
Chris also observed the swiftness of the sales of many properties, including foreclosed homes. Buyers are buying because they are seeing that the market is nearing its bottom.
In April, a Gallup survey found that 71 percent of consumers believed it was time to purchase a home.
Lastly, NAR said low prices of new homes, existing homes and foreclosed homes, continued to be among the major factors for increased home sales.
