April Pending Home Sales Data Is Another 'Green Shoot' For Housing Recovery
The market continues to defy logic and trade higher as investors take comfort in the latest Pending Home Sales data which showed the biggest rise in more than 7 years.
At noon, the Dow was up 6, the Nasdaq Up 4 and the S&P 500 flat.
Data today from the National Association of Realtors showed that April Pending Home Sales rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5. The Street was expecting an increase of just 0.5%.
With house prices continuing to slide, buyers are finally responding. NAR chief economist, Lawrence Yun said, "Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market."
Yun also expects activity to continue, saying "Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."
The Pending Home Sales Index in the Northeast shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago. In the Midwest the index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008. The index in the South slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago. In the West the index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.
Well, are we at a bottom? Maybe in terms of activity, but not prices. But if some sense of liquidity returns to the market, prices may start stabilizing or trending higher. News last week that HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans should also help drive more activity for low-to-mid priced homes. The upper end will still struggle until jumbo mortgages get cheaper and more available.
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