Interest Rate Roundup

Tuesday, May 04, 2010

Pending home sales pop in March

Pending home sales figures were just released for the month of March. They popped 5.3% from February, slightly better than the 5% forecast. The gain followed a 8.3% rise in February, the biggest rise in any month since October 2001.

By region, pendings rose 1.2% in the Midwest and 1.9% in the West. They surged 12.7% in the South, but dipped 3.3% in the Northeast. At 102.9, the pending sales index is up 21% from the year-earlier level.

The latest pending home sales figures confirm that rising affordability and the home buyer tax credit are helping to underpin housing demand. Sales rose nicely in the biggest regional housing market -- the South -- with less robust gains in the Midwest and West.

The key question remains: "What happens now that the credit has expired?" I have no doubt we'll see some giveback in sales. But as I've maintained before, I don't expect some new market crash. Cheap homes and cheap financing, as well as a turn in the broader economy, argue for a continued stabilization in market conditions. Not a robust recovery, but a gradual reduction in inventory for sale, a gradual upturn in sales and construction activity and a stabilization in pricing later in the year.

1 Comments:

  • Mike, you did not address the impact of increasing rate that you are expecting. With increasing rate, the cheap financing will be gone and the monthly payment will go higher (even though the housing price is stable). Job market is unlikely to improve. Unless we hyperinflate, I still don't see housing market going anywhere.

    John

    By Blogger John, at May 4, 2010 at 6:38 PM  

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