Pending Home Sales

Pending Home Sales Index Posts Second Best Month Since April 2010

After 3 consecutive months of growth, the housing market appears to have eased a bit in December.

According to the National Association of REALTORS®, December’s Pending Home Sales Index slipped 4 percent from the month prior. The index measures the number of homes under contract to sell nationwide, but not yet sold.

Despite falling below its benchmark “100 value”, December’s Pending Home Sales Index is the reading’s second-highest value since April 2010 — the last month of last year’s home buyer tax credit program.

In other words, the housing market continues to show signs of improvement, propelled by low home prices and the cheapest mortgage rates of all-time.

Freddie Mac’s mortgage rate survey put the 30-year fixed rate mortgage at an average of 3.96% in December — a 75-basis point improvement from December 2010. This helps to make homes more affordable nationwide.

On a regional basis, December’s Pending Home Sales Index varied :

• Northeast Region: -3.1 percent from November 2011
• Midwest Region: +4.0 percent from November 2011 
• South Region: -2.6 percent from November 2011
• West Region: -11.0 percent from November 2011

But even regional data is only so helpful. Like everything in real estate, data must be local to be relevant.

Throughout the West Region, for example, the U.S. region in which pending home sales fell the most, several states must have performed better than the regional average. And, undoubtedly, there were cities, towns, and neighborhoods that experienced marked market growth.

Unfortunately, the Pending Home Sales Index can’t capture that data. Nor can it identify the markets in which home sales suffered.

For today’s Munster Indiana home buyers and sellers, therefore, it’s important to understand your local market and the drivers of local activity. Reports like the Pending Home Sales Index can paint a broad picture U.S. housing but for data that matters to you, you’ll want to look local.

For local real estate data, talk to one of our experienced real estate professionals listed as The Experts.

Flood Insurance At Risk In Latest Tea Party Showdown

We are lucky, here in Northwest Indiana, that most of us have property where we are not required to buy flood insurance. As we have written before on this site, some areas that experienced flooding in the past are now less susceptible,  thanks to levee projects and other Federally funded flood controls.

FEMA, the Federal Emergency Management Agency, who determines areas might be in flood danger, has even changed it’s Flood Insurance Rate Maps in the NWI region, relaxing and removing some homes from the designation. Within the last 10 years local communities which have experienced floods include:

• Munster Indiana,
• Highland Indiana
• Hammond, Indiana
• Griffith, Indiana
• Lake Station, Indiana
• Unincorporated Calumet Township
• Gary Indiana
• Hobart Indiana

Ogden Dunes, Indiana and Beverly Shores, Indiana have experienced erosion from Lake Michigan storms and rising water levels. Chesterton, Indiana recently had a tornado. In short, the infrastructure improvements built to handle Spring and Summer floods have reduced our collective exposure to risk on the Little Cal, but we still run risk of natural disasters. With infrastructure improvements we have less risk, greater confidence and safety.  However, we can never be so confident we can just abandon such an important program.

But it is not so simple in Washington. The government backed National Flood Insurance Program (NFIP) has long been a sort of political football. The way appropriation bills are packaged together and voted upon, this FEMA program is the red-headed-stepchild of Congressional legislation. It  has a history of lukewarm on-again-off-again support and  funding in Congress. For years it has been a patchwork of stop gap funding measures instead of an ongoing and stable program. And after the monumental showdown over the debt ceiling, at the end of September, NFIP is one of those remaining loose ends with one foot on the banana peel.  A Sept. 30 BUSINESS WEEK article suggested that a compromise was near, but that compromise only gave the program another month; and time is up once more.

Property owners pay for flood insurance. This is not a government hand-out. And the rate maps, which are frequently updated, because waterways do change over time; selecting who is required and who excluded from the requirement is always a hot topic. Since the government only underwrites the program, NFIP is supposed to be self-financed without any long-term taxpayer infusion. Only when extraordinary disasters, like Hurricane Irene occur,  do government reserves become necessary.

You might ask “why are people allowed to have a home in a flood plane at all?” and that question is part of the controversy. With global climate change, these questions will always be somewhat hypothetical. There will be owners paying for insurance who will never collect on a loss. And others, such as we recently saw with Hurricane Irene who were badly flooded while never expecting they were in danger.  I found anecdotes from owners complaining of uncertainty from changing map boundaries, 300% increases in premiums; others asking”…why should I be forced to pay for this?  I have never been flooded.” And so, like any insurance it is risk management. Your mileage will vary. There is no guarantees how it will turn out for any single property at the end of the day.

REALTOR’s would like to see better stability in the program rather than the current series of short term extensions. Ron Phipps, the National Association of  Realtor’s President put it this way:

“As the leading advocate for homeownership and housing issues, NAR strongly supports the NFIP and believes that a 5-year extension of the program’s authority to issue flood insurance is essential to a properly functioning real estate market.”

Other NAR studies estimate that  about 1,300 property transactions PER DAY will be shelved during the time of any NFIP lapse. Any real estate deal involving a mortgage (most home purchases are bought using financing)  cannot be closed without being insured. Purely private flood insurance is not available. Since Federal backing underwrites this entire insurance sector ALL the carriers provide similar coverage and rates,   According to NAR, this is the 3rd time this program has been interrupted since 2008. And the REALTOR’s believe that the public should be just as concerned about how the 9% or so of the nation’s NFIP affected homeowners who are at risk  due to partisan politics and Congressional brinksmanship.

As the budget impasse keeps Congress on a slow boil, with  politicians grumbling about eliminating not just Federal programs but entire  agencies from the US organizational chart; we need to think about those millions of homeowners who may be left without insurance.  While Northwest Indiana is not as affected as some other regions of the US, we DO have homes in flood zones. And we HAVE had floods in the past. NAR, speaking out on behalf of these owners is not asking for a hand-out. These homeowners pay dearly for their coverage and only ask for their programs’ enabling legislation to have a little stability and continuity. And personally, as a REALTOR who works with recreational and residential properties, I have witnessed first-hand the frustration and powerlessness that buyers feel when they are left hanging. It is important to have ALL our property owners able to have a level playing field, with the ability to get the insurance coverage they need. And it is irresponsible for Congress to plug up vital programs in order to flaunt a political agenda.

Please share your comments below.  Relate your  disaster tales and tell us your experiences with FEMA and NFIP.  If you feel strongly, share your views with your Congressmen.

Nationwide Open House Weekend Kicks Off Today

Nearly half of all home buyers visit open houses during their home search. This weekend, those numbers may swell as buyers across the country take advantage of the Realtor® Nationwide Open House, June 4-5.

“Realtors® bring value to home buyers and sellers, and this weekend, Realtors® are bringing them together through the Realtor® Nationwide Open House,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “The event will give consumers the chance to find out more about home ownership, allow buyers to pursue their dream of owning a home, and give Realtors® an opportunity to connect with consumers about the housing issues that matter most in their area.”

During the weekend of June 4-5, Realtors® will hold open houses in local neighborhoods throughout the country, as well as across the globe. Over 300 Realtor® associations are participating in the event, along with NAR global partners in Canada, Denmark, France, Israel, Mexico, Norway, Peru, Philippines, Romania, Sweden, and the United Kingdom. During the weekend Realtors® will be on hand to provide guidance and insights into the social and financial benefits of home ownership.

According to a recent nationwide Pew Research Center survey, eight in 10 adults agree that buying a home is the best long-term investment a person can make. In addition, a strong majority of renters – 81 percent – said they would prefer to one day buy a home, demonstrating the value Americans continue to place on home ownership.

“There’s a reason owning a home is called the American Dream,” said Phipps. “Home ownership benefits individuals and families, strengthens our communities, and is integral to our nation’s economy. We hope that everyone who aspires to become a home owner will come out this weekend, not only to learn about the homes for sale in their local market, but also to find out more about how current and future public policies may affect their ability to achieve and sustain home ownership, now and in the future.”

To find open houses in your area, visit www.realtor.com and search for open houses in the Realtor® Nationwide Open House Weekend box on the home page. The special search function will be available beginning June 3.

Reprinted with permission of the NATIONAL ASSOCIATION OF REALTORS®. Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section.

The Good News Behind May’s Pending Home Sales Report

The Pending Home Sales Index plunged in May 2010, just one month after the expiration of the federal home buyer tax credit program.

The Pending Home Sales Index is now at a record-low level.

A “pending home sale” is an existing home under contract to sell, but not yet closed. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days.

Because of this timeline, we can expect the summer’s Existing Home Sales to be weak, too. With fewer homes going under contract, fewer homes can close.

On the surface, May’s Pending Home Sales Index looks like terrible news for housing. It just might be if you’re a seller. But, the story reads differently if you’re a buyer.  Just consider the market conditions. 

A broad look at the housing market shows:

1. Home supplies are rising in most markets
2. Home sales are falling in most markets
3. Mortgage rates are at all-time lows

In other words, in most markets, more sellers are competing for fewer buyers, and the “winning” buyers are financing their homes at the lowest rates in history.

It’s an excellent time to be a home buyer in Portage Indiana.

Pending Home Sales Data Shows Great Deals Harder To Find

The Pending Home Sales Index shot higher in April as low mortgage rates and a soon-to-expire federal tax credit spurred home buying in Hobart Indiana and across the county.

A “pending home sale” is a home that’s under contract to sell but not yet closed.

Region-by-region, April’s pending home sales varied versus March’s data:

• Northeast Region: +29.5%
• Midwest Region : +4.1%
• South Region : -0.6% (after a +15.9% posting in March)
• West Region : +7.5%

On an annual basis, the Pending Home Sales Index is higher by 22 percent.

April marks the third straight month that pending home sales are up and today’s buyers should take note. This is because, according to the National Association of Realtors®, 80% of homes under contract close within 60 days.

In other words, May and June’s existing home sales data should be similarly strong, causing the Lake County Indiana real estate market to gently shift in favor of sellers.  In fact, already, we’re seeing home resales touch multi-year highs while new home supplies fall to multi-year lows.

All of it tends to push home prices higher while simultaneously reducing buyer negotiation leverage. That, coupled with the high probability of higher mortgage rates ahead, means that finding “deals” will get tougher for the average home buyer.

In looking at the housing market data, it appears that the best month in which to have bought a home this year was February.  The next best time may be right now. 

Talk to your real estate agent if you’re planning to buy a home this year.  It may be sensible to move up your time frame a few months.

Will March Pending Home Sales Lead to Higher Home Prices

The Pending Home Sales Index moved higher in March as home sales were spurred by low mortgage rates and an expiring tax credit.

A “pending home” is a property that is under contract to sell, but not yet closed.

March marks the second straight month in which the Pending Home Sales Index improved after a series of weak showings this past winter.

March showed a 5 percent increase over the month, but the Pending Home Sales Index is still off its October 2009′s peak.  October 2009 is a comparable period to March 2010 in that it marked the 1-month deadline before the home buyer tax credit’s initial expiration date. The credit was later extended to April 2010, of course.

That said, March’s surge in sales is being felt on the street.

Home buyers in Highland Indiana no doubt noticed the change in activity. Around the country, anecdotally, multiple offer situations were more common last month and “right-priced” homes tended to go under contract quickly.

The increase in March’s Pending Home Sales is diminishing the nation’s home supply which, in turn, should cause prices to rise in most markets — including Lake County Indiana.

Today’s buyers should consider making an offer sooner rather than later.  Looking at the data, it appears the best time to have found a “deal” on a home may have been in February.