Pending Home Sales Are Up Again

Pending Home Sales Are Up Again
This morning’s National Association of Realtors report indicates that pending home sales rose in June, the fifth straight month of increase for the U.S. market. This confirms what most analysts had been predicting and marks the first time since 2003 that five monthly increases have backed up to one another. The gain of 3.6% was even higher than the top end of Bloomberg’s prediction survey.

NAR President Charles McMillan also took the opportunity to lobby against the new appraisal rules and expressed optimism since Freddie and Fannie recently reiterated the need for appraisals to be handled by people with local knowledge. McMillan’s hope obviously is that fewer contracts will fall through due to unexpected appraisal evaluations.

Given that, NAR’s pending sales report should be a fairly reliable indicator of how the report on closings will shake out down the line.

Uvestor Opportunity:
Home prices remain on the low end, and interest rates are nearly historically low. Those factors combined with various incentives for first-time homebuyers are going to drive a sales spike between now and early autumn. The investor that is poised to sell lower priced inventory is positioned well to move properties immediately. With the November 30th deadline looming, make sure buyers are aware that the closing can take weeks and, though no one can predict future policy, there are no current indications the program will be extended beyond that date.

Meanwhile, higher unemployment rates are creating more foreclosure opportunities for investors looking to buy. Plus, on the horizon, adjustable mortgage resets will occur in droves over the next couple of years, and those will have an as-yet-unknown consequence on the market.