NAR 2010:”Prices Up,Durable Recovery”

NAR  announced to their national convention that “housing prices will rise in 2010″. Over a cheering crowd, Lawrence  Yun, chief economist for NAR gave several reasons to see 2010 housing with rose colored glasses.

“Things are much better,” Lawrence Yun said to applause at the organization’s annual convention in San Diego, attended by an estimated 20,000 delegates. ..We’re seeing price stabilization on a month-to-month basis..We will be set for a durable economic recovery,” he said. “

Yun cited low interest rates, improved affordability among would-be home buyers and increased sales activity, primarily for starter homes.

Additional reasons for his optimism:

• $8,000 tax credits to first-time buyers
• 16 million renter households making enough money to qualify to buy homes, demand should remain strong next year and restore confidence among all would-be buyers and households in general
• The pool of first-time buyers is 5 million more than in 2000 representing pent-up demand, Yun said.

Yun predicts that if the credit continues to have the same impact on demand in 2010, overall house prices might rise 4 percent next year, after falling 12.9 percent this year

• home resales could increase by 800,000 above this year’s 5 million mark
• while new-home sales could rise as well
• Yun also forecast that Realtor incomes will go up 20 percent next year.

Pending Home Sales Rise Biggest Since 2001

Pending Home Sales Rise 6.7% / Third Straight Month of increase

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, 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 group said. Economists surveyed by Thomson Reuters (TRI) had expected the index would edge up to 85 from a reading of 84.6 in March. It was the biggest monthly jump since October 2001.

Pending home sales activity was greatest in the Northeast, where the index increased 32.6%, to 78.9, in April, 0.8% above a year ago. The only region that showed a decrease was the South, where the index declined 0.2%, to 93.0, 3.5% higher than a year ago. In the Midwest the index rose 9.8%, to 90.4, and is 11.1% above April 2008. In the West the index rose 1.8%, to 94.8, but is 2.9% below a year ago.

NAR’s Lawrence Yun, the group’s chief economist, said buyers are responding to very favorable market conditions, and while the total number of existing-home sales is expected to improve, there will be sharp local variations. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said in a news release.

Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing-home sales.

Paul Dales, U.S. economist for Capital Economics in Toronto, said i

“The pending home sales index has now improved for three months in a row, adding to the evidence that housing activity is finding a floor,” Dales wrote. Nevertheless, even if existing-home sales were to rise to 5.1 million, they would still be 30% below their peak. Accordingly, even if activity is finding a floor, it is at staggeringly low levels.”