It was expected, but not this bad. All of the experts were prepared for a drop once the homebuyer tax credit lapsed at the end of April, but no one expected it to be close to a shocking decrease. According to the National Association of Realtors (NAR), pending home sales fell a whopping 30% in May. Their index, which measures signed sales contracts but not closed sales, plunged to 77.6 from 110.9 in April.
It’s even off 15.9% from a year ago when the nation was barely emerging from the recession. Stats show it was the biggest monthly decline ever and the index is at its lowest level since NAR began tracking it in 2001.
Lawrence Yun, NAR’s chief economist downplayed the damage a bit. According to him, customers rushed into deals to claim the credit, borrowing from May sales. Once the economic recovery comes into full swing, housing markets will heat up. Those conditions include much lower home prices and extremely favorable mortgage interest rates. The question is when — or if — the job market will ever bounce back. “We’re not creating jobs,” said Larson. “The housing problems now are being driven by broad economic problems.
On a different issue, RealtyTrac released a report that foreclosure sales took up 31% of all home sales in the US through the first quarter of 2010. According to the report, there were 88,000 pre-foreclosure sales, often short sales, in the first quarter, for an average discount from retail home prices of 14.7%. By comparison, REO discounts in the US averaged 34%. This really has changed much in the last 2 quarters. 
Besides all of the added costs, the amount of recovery is even a more compelling reason for banks to want to allow the short sales instead of pushing to foreclosure.
The data basically just shows that there is still time to buy. Interest rates are still cooperating so go looking at some new homes or some investment property over the 4th of July weekend.
I hope everyone has a happy and most importantly a safe holiday!
More soon!
Alan
Follow Us!