Looking at the recently released NAR Pending Home Sales Index and what it means for anyone selling a home…
I am sure that unless you are from the South or a rural area the saying “God willing and the creek don’t rise” may not be clear to you. More or less, it means if nothing bad happens, then whatever it is you are talking about will happen.
Like a property that is under contract, also known as pending, actually closes.
I could also throw “Don’t count your chickens before they hatch” out as another way of saying that just because a property is under contract does NOT mean it will close. I can remember several years ago that once a property went under contract it had a pretty high chance of closing. Now, we have to worry about many different reasons that a property will not close.
With that being said, NAR just released their Pending Home Sales Index. Like I said, the NAR’s Pending Home Sales Index is a forward-looking indicator based on contract signings and NOT closings. So while it is looking forward, there is good news in the report from NAR:
- Pending home sales rose to the highest level since the 2010 Homebuyer Tax Credit
- 15 consecutive months of year-over-year gains in pending sales
- Pending home sales in the South are 15.6% above the level one year ago
- NAR thinks that existing home sales will rise 8% to 9% in 2012
- NAR also thinks home prices will rise 10% over the next 2 years
Yet another report that indicates recovery in real estate may actually be happening. I sure hope that we are not hearing premature reports that the housing bottom has finally arrived. I honestly think we may have seen the bottom but I also do not think the recovery will be as fast as we want.
I think prices will slowly and gradually start creeping up. I do NOT agree with NAR about home prices increasing 10% over the next 2 years. It would be great for those that are underwater on their mortgages and need to sell. But we really do not want another bubble in real estate.
Many economists thought that the number of Pending Home Sales for the US would only increase 1% instead of the 2.4% that we saw in July 2012. And they were wrong. So maybe I could be wrong about home prices increasing 10% in the next 2 years?
If we look at July 2012 Market Indicators for Upstate South Carolina, we see that the number of Pending Home Sales in July 2012 was much lower than back in July 2011. I would caution a seller to not be too concerned about the number of Pending Sales for the entire WUAR MLS.
Instead, I would focus on how many homes like the seller’s have sold recently.
I would look at the average Days on Market for similar homes in your area.
I would look at how many similar homes is a seller going to have to compete against.
And much much more…
Including the number of pending home sales for similar homes!