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"Pending home sales rose in March for the second consecutive month and are up year over year. The Pending Home Sales Index from the National Association of Realtors showed a 3.2% gain to 84.6 from February, when it was 82. The index stands 1.6% higher than a year ago."
"Today, buyers are more likely to bid because they perceive the market as at or near its bottom. An April Gallup Poll reported that 71% of Americans thought it was a good time to buy a house."
""Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment," said NAR President Charles McMillan, in a prepared statement. "For buyers who've been on the sidelines and have good jobs, the market has never looked more favorable."
Who buys a stock because volume is increasing? Volume / sales has negligible value as a predictor of future prices. Prices may drive volume, but not the other way around.
Pending sales are a lot different from closed sales. Take this statistic with a grain of salt, particularly since thinks tend to pick up a bit for Spring. What they don't report is the number of sales that fell through. I'd be more curious to know the numbers on closed sales than pending sales.
Prices may drive volume, but not the other way around.
So you're saying that the law of supply and demand doesn't apply?
Volume doesn't drive prices? If there is a smaller number of homes available because the sales volume has increased, then prices will not increase? So then if that is true, why should we fear the number of foreclosures that are in moratorium? Apparently the flood of those should not affect volume? What am I missing?
Does not matter what it is measuring since it is comparing month over month and year over year. All that matters is that it is trending upwards -just like the stock market -which is a leading indicator ahead of housing and the economy. Numbers don't lie -people do.
I've noticed a lot more houses going pending and a lot fewer REO's coming on the market. Can't quite figure out why the foreclosures are slowing down so much. Maybe because of Obama's "intervention?"
HUGE number of job losses coming our way though and people are definitely going to have to leave the state to find any type of employment so I'm thinking theres gonna be a lot more listed soon......and NOOOOO...that doesn't make me happy. Even as a buyer.
So you're saying that the law of supply and demand doesn't apply?
Volume doesn't drive prices? If there is a smaller number of homes available because the sales volume has increased, then prices will not increase? So then if that is true, why should we fear the number of foreclosures that are in moratorium? Apparently the flood of those should not affect volume? What am I missing?
You are missing that RE agents want their Sellers to think that there are so few buyers that the Sellers need to keep lowering their listing price! RE agents do not make money by taking the time and effort to actually sell a house. RE agents make big money by turning over LOTS of houses. Even it their profit is smaller, it's still in their best interest to get the Seller to lower their price. How else better to do that then to make the seller think there are NO buyers out there? At least that was the case with the RE agents I had.
So you're saying that the law of supply and demand doesn't apply?
Volume doesn't drive prices? If there is a smaller number of homes available because the sales volume has increased, then prices will not increase? So then if that is true, why should we fear the number of foreclosures that are in moratorium? Apparently the flood of those should not affect volume? What am I missing?
Primarily, you're missing the history of previous housing bubble corrections. What increasing volume mean during a housing downturn is that sellers are finally dropping prices to the level that buyers can and will afford. The more affordable prices become, the more buyers can be part of the market, and sales volumes go up. Eventually inventory will clear and prices will stabilize, but right now many markets are still working their way out of a stalemate between buyers and sellers.
Look at the last S. CA downturn to see that a price bottom lagged the increase in sales volumes by 4-5 years. Or look at the behavior of the market in Phoenix and Vegas now - they're seeing near-bubble levels of transactions in the midst of 30% year-over-year price drops for the last year or more.
And I agree that this might not be the best indication of future closings. We had a year over year gain in December pending sales (+6% from Nov '08, +2% from the previous December) that had everyone excited as well. Did the closed sales for subsequent months show a corresponding boom? Nope, in fact they showed 8.6%, 4.6% and 7.1% year over year declines (using the existing house sales numbers from the NAR). Don't get too excited about a small amount of noise in an index that's just a month or two off record low levels.
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