Home sales fall but overall confidence in US property market steady
Pending home sales in the US have fallen but sharply but analysts are not worried as overall confidence is steady in the real estate markets.
Figures from the National Association of Realtors (NAR) show that it’s Pending Home Sales Index fell sharply by 16% in November to 96.0 from 114.1 in October, ending a nine month rise.
The NAR attributed the fall on the end of a rush to beat the original expiration of the $8,000 tax credit for first time buyers. The tax credit had been due to expire on November 30 but has now been extended to April 30 this year.
NAR chief economist Lawrence Yun said that putting things into perspective the index is up 15.5% compared with November 2008 when it was at 83.1. ‘The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own,’ he said. ‘We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires,’ he added.
Not everyone though is this positive. Pending home sales are contract signings, not closings, and thus considered a leading indicator of existing home sales which are closings. Pending home sales gives an advance warning of what is likely to happen in existing home sales, according to Joseph Trevisani, chief market analyst, FX Solutions,. ‘We may see a drop in those numbers as we saw in November’s new home sales. This does not bode well for the housing market,’ he claimed.
Meanwhile the NAR’s annual survey of buyers and sellers shows a huge surge in the number of people using the internet to search for property. Some 90% said that they used the internet at some point and 76% said they did so frequently. Just seven years ago only 41% of buyers indicated any internet use at all.
The top sources of information were internet, 90%, real estate agent, 87%, yard signs, 59%, open houses, 46%, and newspaper advertising, 40%.
Asked which information sources were very useful, the top three were real estate agent, some 81%, internet, 77% and yard signs, 42%. Some 10%of buyers found open houses to be very useful sources of information while another 25% found them to be somewhat useful.
In terms of results the survey shows that 36% of buyers found the property that they ultimately purchased on the internet, a huge growth compares with 2001 when it was just 8%. While another 36% did so via a real estate agent, down from 48% in 2001.