Housing Rebound Continues Nationally…
National home sales continued an upward swing in May, according to a closely watched industry report that rose for the fourth straight month for the first time in nearly 5 years.
The Pending Home Sales Index, reported Wednesday by the National Association of Realtors (NAR), rose 0.1% during the month. The index was up 6.7% compared with May 2008. It was the first four-month run up in the pending sales measure since October 2004
Industry prognosticators had forecast no growth at all in the index for the month, according to Briefing.com, expecting it to settle back after ramping up 6.7% in April.
Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions.
Many industry insiders have complained that home appraisals are being too often based on values of foreclosed properties, which sell for significantly less than the homes of ordinary sellers.
The banks that have repossessed the foreclosed homes are anxious to sell and accept offers at large discounts than comparable homes not in foreclosure.
Distressed homes often are selling for 20% less than normal homes in the same area, but some appraisals don't distinguish between traditional homes and distressed property. Overall, home sales are still slow, about a third below the peak years of 2005 and 2006.
The May number points to a gradual but slow housing recovery. One factor favoring a rebound is lower home prices. NAR's Housing Affordability Index remains near historic highs, although it declined in May to 171.6 from 178.8 a month earlier, mostly due to higher interest rates. April was the high point for the index, which dates back to 1970.
Under current home prices, the typical family would devote only 14.6% of gross income to mortgage principal and interest, which is one of the lowest percentages on record. If interest rates hadn't crept up, we may have seen a better number for the May index.