After the first time home buyer tax credit expired last year, home sales dropped as would be expected.  From mid-year right through the close of 2010, the housing market was on the rebound. 

The National Association of REALTORS® released their January report showing a 3% drop and made a downward revision of December’s figures. 

As always, national data pretty limited in its ability to help you figure out the housing market on a neighborhood-by-neighborhood level.  NAR gets a little better and releases a regional report.  That looked like this:

• Northeast Region: -2.4%
• Midwest Region : -7.3%
• South Region : +1.4%
• West Region : -5.2%

Even this is too broad to help figure out the actual supply and demand of Wicker Park v. Lincoln Park, but it’s an improvement.   Real estate data must be local to be relevant.

Realistically, a home buyer shouldn’t look at this slight pullback in demand for too long.   Shop while this data is in the minds of sellers.  It won’t likely last. 

The weather was awful nearly from coast-to-coast in the past two months.  Bad weather delays purchases.  It doesn’t remove those buyers permanently.  If you look at the six-month moving average of Pending Home Sales, it would appear that we should have pent-up demand hitting the market in spring.  If that’s the case, then the buyer who waits for perfect weather to write a contract may end up with a less-than-perfect negotiating position.

After a strong run to close out 2010, the market for home resales softened a bit in January.

On a seasonally-adjusted basis, the Pending Home Sales Index dropped 3 percent last month, and December’s figures were revised downward for a loss, too, according to the National Association of REALTORS®.

A “pending home sale” is defined as a home under contract to sell, but not yet closed. 

The forward-looking index is now at a 3-month low on a national level, but still well ahead of its rolling 6-month average.

Unfortunately, national data isn’t overly helpful for buyers and sellers of real estate. The National Association of REALTORS® knows this, of course, and makes an effort to get more granular, supplementing the Pending Home Sales Index report with a region-by-region breakdown. 

Between December and January, only the South Region increased in sales volume. The Midwest led the losers:

• Northeast Region: -2.4%
• Midwest Region : -7.3%
• South Region : +1.4%
• West Region : -5.2%

Even still, however, regional data remains too broad to be practical. The South Region, for example, is comprised of multiple states with thousands of cities and town. The housing market dynamics of a specific neighborhood in a specific regional city will differ from that of another neighborhood in another regional city.

Real estate data must be local to be relevant.

Overall, then, what may be most telling from January’s Pending Home Sales Index is how weather can influence results.

Most of the country faced drastic weather conditions in January, ranging from raging snowstorms to bitter cold. Events like that tend to put a damper on home sales, a contributing factor in why the number of new contracts fell.

Another reason is rising mortgage rates. Conforming and FHA rates rose week-by-week in January, robbing home buyers of 10% of their purchasing power. This, too, can slow down purchase activity as buyers adjust their expectations.

Looking forward, we should expect the Pending Home Sales Index to resume rising. Inclement weather doesn’t kill demand; it just delays it. And mortgage rates have settled somewhat. These two factors should help release pent-up demand just as the Spring Homebuying Season gets underway.

As more buyers enter the market, negotiation leverage will shift to home sellers, pressuring home prices higher. The lowest prices of the year — and the cheapest financing — could be what you see today.

Another great report for the housing market today. 

Today’s release was the Pending Home Sales Index.  It shows a 2% jump in December according to the National Association of REALTORS®. A “pending home sale” is an existing home under contract to sell, but not yet closed.

This is now five out of six months with an increase and it puts us at the highest levels since the expiration of the first time home buyer tax credit in April.

Combine this data with December’s Existing Homes Sales report (+12%) and New Home Sales report (+17%), this is a recovery for housing.   In a closely related figure, consumer confidence is at an 8-month high.

As always, there are variances by region.  In this case, big variances.  We’re seeing a slowdown in the West, significant and continued growth in the South.  Here is the data:

• Northeast Region: +1.8%
• Midwest Region : +8.0%
• South Region : +11.5%
• West Region : -13.2%

Home buyers should keep an eye on these reports.  They offer insight about what spring should be like. We know that 80% of the pending sales will close within 60 days.  With a reasonable level of confidence, we can assert that home sales in February and March will be higher.  Since home supply is dipping, the battle between supply and demand is starting to shift to the advantage of the seller.  That presses home prices up.

And then the bad part…it’s also tied to the economy.  Mortgage rates get their direction, in a large part, from the overall economy.  As mortgage rates move higher, home affordability goes lower.  Coupled with rising home demand, your dollar won’t buy as much in the second half of 2011 if these trends hold true.

Another day, another strong report for housing.

The Pending Home Sales Index climbed 2 percent in December, according to the National Association of REALTORS®. A “pending home sale” is an existing home under contract to sell, but not yet closed.

Pending Home Sales are up for the fifth time in 6 months. The December reading is now its highest since the federal home buyer tax credit’s April 2010 contract deadline, and the figure is well north of the Pending Home Sales Index 3-year average.

Coupling this data with December’s strong Existing Homes Sales report (+12%) and its strong New Home Sales report (+17%), it’s clear that the housing market has past its trough and is in Recovery Mode.

Even consumer confidence is at an 8-month high.

On a regional basis, December’s Pending Home Sales Index varied as compared against November. The South region led the way, and the West region lagged.

• Northeast Region: +1.8%
• Midwest Region : +8.0%
• South Region : +11.5%
• West Region : -13.2%

Home buyers in areas such as Bucktown would do well to study last month’s Pending Home Sales Index. It offers clues of what to expect during the spring buying season. For example, according to the National Association of REALTORS®, 80 percent of homes under contract close within 60 days.

Therefore, we can look at the December Pending Home Sales Index and project, with a high level of confidence, that home sales will be higher throughout February and March on a units-basis.

Furthermore, because the Existing Home Sales and New Home Sales reports show that housing stock is falling nationwide, spring buyers in Oak Park will notice find more competition for the available housing stock. As the Supply-and-Demand curve shifts towards sellers, home prices rise.

In other words, there’s no rush to buy a home, but as the year progresses, home prices are expected to rise, as are mortgage rates. This one-two combination will impact home affordability negatively. And the higher that mortgage rates go, the worse the damage.

Your home-buying dollar won’t go as far in 2011′s second half as it will go right now. If you have plans to buy a home in 2011, consider moving up your time-frame.

November’s Pending Home Sales Index from the National Association of REALTORS® shows a 3% gain over October.  A “pending home sale” is a home under contract, but not yet closed.  We’re continuing to recover from the hangover of April 2010′s first time home buyer tax credit expiration. 

The very logical theory presented by every economist and yours truly is that the April expiration helped accelerate sales forward that would have otherwise closed over the summer.  This theory is buoyed by Home Buyer Tax Credits I & II as well as the Cash for Clunkers program.  These stimuli have had the effect of simply getting people to buy sooner, not necessarily getting new people to buy. 

If that is the case, the two spikes in the Pending Homes Sales graph are the expirations of Home Buyer Tax Credits II and III.  Assuming that the 2009 credit and the 2010 credit were both pulling from the traditional “warm month” home purchases, it appears that housing has rebuilt a strong foundation of buyers and has been pretty steady over the past year.

As was to be expected, the surges near the time of the tax credit expirations were dominated by first time purchasers.  These most recent figures have shown strong growth in the repeat, or upgrade, buyer market.  

Home values follow from supply and demand.   We’re seeing buyer traffic and clearly they’re writing contracts.  We’re seeing home supply dwindle lower.   This looks good for home values. 

The only question not yet answered is the “shadow inventory” from all of the old foreclosures.   The theory from the “shadow inventory” folks is that the banks will eventually try and simultaneously sell all of their real estate, thus crushing home values.  If they did flood the market at once, it is logical that home prices would fall. 

The theory from foreclosure tracking firm, RealtyTrac, is that the banks will logically be more strategic and slowly sell their assets so that they don’t undercut their own values on the books.  I tend to side with RealtyTrac.

Barring any massive changes, housing looks as healthy as it has in quite a few years. 

The housing market continues to expand, and surprise.

According to the National Association of REALTORS®, November’s Pending Home Sales Index gained 3 percent from October. A “pending home sale” is a home under contract but not yet closed. 

The index is now at its highest point since April 2010′s federal tax credit contract expiration deadline.

If the tax credit really did “borrow” sales from the summer months, as has been theorized, housing has rebuilt its foundation. 

We know this because, of all the housing data available to Oak Park  homeowners and home buyers, the Pending Home Sales Index stands apart as a forward-looking report — its designed purpose as described in its methodology.

Because 80% of all homes under contract close within 60 days, and a statistically significant share of the rest close within months 3 and 4, the Pending Home Sales Index is an excellent predictor of future Existing Home Sales data.

This is in contrast to the New Home Sales data and Case-Shiller Index, as examples, which both describe the real estate market as it existed two months in the past. The Pending Home Sales Index reports on housing as it exists right now. We should expect January’s Existing Home Sales report, therefore, to show marked strength, consistent with a housing market recovery.

The downside of the Pending Home Sales Index is that it’s a national report and real estate is not sold nationally — it’s sold locally. To get a feel for your home market and how it’s faring, talk to a licensed real estate agent with access to local home sale data. 

If pending sales data is available, so much the better. Forward-looking figures can be more helpful than data that’s already old.

Low mortgage rates and low home prices have spurred buyers back into action.  A “pending home sale” is an existing home under contract to sell, but not yet closed.

What is notable right now is that we’re back to our highest levels since April–the deadline for the first time home buyer tax credit.  What’s really notable is that we have buyers buying based on the fundamentals of home affordability as opposed to the carrot of an $8,000 tax credit. 

It also explains why builder confidence continues to rise in spite of the fact that the New Home Sales report was soft.   Builder confidence is heavily weighted on not only sales, but also foot traffic and six month projections.  The builders, the people with skin in the game, see things getting better.

As always, real estate is local.  Regionally speaking, the Midwest saw the biggest pop from September to October.  By region:

• Midwest Region : +27.3%
• Northeast Region: +19.6%
• South Region : +7.1%
• West Region : -0.4%

The Pending Home Sales Index is a reasonably good forecast of the Existing Home Sales figure in November and December.  Roughly 80% of homes under contract close within 60 days according to the National Association of Realtors.

Put simply, the housing market is heating up.   Similar to April when Realtors were complaining about a shortage of well-conditioned, well-maintained homes, we’re seeing it again.  A shortage of desireable homes significantly reduces buyer leverage in negotiations. 

When is this a problem?  When you’re shopping when other buyers are as well.  A great example is spring.  There is nothing that reduces negotiating power than multiple offers, so why would you want to shop when other people are?

Roses in July are less expensive than roses in February.  It’s simple supply and demand.  Same deal with homes.

Talk to your real estate agent now if you’re thinking about buying in 2011.  The smartest move might be to buy before another offer starts driving up the price on your dream home. 

The Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Chicago buyers into action.

A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program.

The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better.

On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard.

• Northeast Region: +19.6%
• Midwest Region : +27.3%
• South Region : +7.1%
• West Region : -0.4%

Home buyers looking in areas such as Bucktown should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong.

In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined.

The best time to buy a home this year may have already passed. The next best time may be right now.

Talk to your real estate agent if you’re planning to buy a home in 2011. It may be smart to move up your time frame.

After 3 straight months of improvement, the Pending Home Sales Index slid lower in September. As compared to August, September’s reading fell 2 percent.

A “pending home sale” is a home under contract to sell, but not yet closed. The data is drawn from a combination of local real estate associations and national brokers, and represents 20 percent of all purchase transactions in a given month.

Because of the large sample set, and because 80 percent of homes under contract close within 60 days, the Pending Home Sales Index is a terrific future indicator for the housing market. A high correlation exists between the Pending Home Sales Index and the NAR’s monthly Existing Home Sales report issued two months hence.

Expect home sales to idle into the New Year, therefore.

For home buyers in Oak Park , this is good news. Over the last two months, housing markets have overwhelmingly favored home sellers.

Consider than, since June, the volume of both new home sales and existing home sales has increased, causing the available home inventory to fall by months. Meanwhile, helped by low interest rates, demand from buyers has remained relatively stable.

As with everything in economics, falling supply with constant demand leads to higher prices.

Therefore, the Pending Home Sales Index’s fading September figures suggest a more balanced supply-and-demand curve in the months ahead, a move that should suppress rising home prices and shift negotiation leverage back to the buy-side. 

So long as mortgage rates remain rock bottom, the autumn season is looking like a terrific time to buy.

A “pending home” is an existing home under contract to sell, but not yet closed.

At the time of the plunge in pending sales in April, it appeared that the main catalyst was the first time home buyer tax credit’s “stimulus” on sales.  What happened, similar to Cash for Clunkers, was that a lot of transactions were pushed forward.  So, that couple that would have purchased in the later part of the summer had an incentive to purchase earlier, thus creating the surge in contracts pre-expiration and ensuing hangover in sales post-expiration.

According to the National Association of REALTORS®, 4 out of 5 pending homes close within 60 days, and many more close within 90 days.  The Pending Home Sales Index is an excellent forward-indicator for housing sales in the next three months.

For example:  After July’s 27% plunge in Existing Home Sales, they recovered in August.  This was no surprise as the July Pending Home Sales Index predicted it.

Region-by-region, the Pending Home Sales Index varied in August, suggesting better sales levels in the South and West markets:

• Northeast : -2.9% from July
• Midwest : +2.1% from July
• South : +6.7% from July
• West : + 6.4% from July

That said, real estate markets aren’t “regional” — they’re local.   Housing data for even “Chicago” isn’t granular enough, let alone a category like “Midwest.”  Real estate  hyper local.

Still, we’re seeing more buyers drawn into housing with low mortgage rates, affordable homes, and a supply that is increasingly seeing the “good homes” go quickly.   Since the alternative is to buy the leftover home in spring and possibly at higher rates, it appears that we’re looking at a relatively busy fall purchase market.