Last week the National Association of Realtors (NAR) released their Pending Home Sales Index. The Index, a forward-looking indicator based on contract signings (not closings), rose 2.4 percent to 101.7 in July up 12.4 percent above July last year. The index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. Lawrence Yun, NAR chief economist, said:
“While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity.”
This preceded NAR’s Existing Home Sales Report which showed closed sales were up 10.4% over last year. Prices were also up 9.4% year over year. NAR expects existing home sales to rise 8 to 9 percent in 2012, followed by another 7 to 8 percent gain in 2013. Home prices are expected to increase 10 percent cumulatively over the next two years.
And even though new construction sales showed a 25% increase over last year, Yun explained that should not dramatically impact prices:
“Falling visible and shadow inventories point toward continuing price gains. Expected gains in housing starts of 25 to 30 percent this year, and nearly 50 percent in 2013, are insufficient to meet the growing housing demand.”
Housing is in the middle of a recovery without a doubt.