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Home Sales Should Be Stabilizing Soon04-01-09 | News

Home Sales Should Be Stabilizing Soon

Improving sentiment has not yet shown through in official home sales data. Sales of new homes, as reported by the Commerce Department, and pending sales of existing homes reported by the National Association of Realtors??????oe (both based on contract signings) declined substantially in January, reaching new cyclical lows.

Large cumulative declines in home prices in many areas, combined with attractive interest rates on prime conventional conforming fixed-rate mortgages (salable to Fannie Mae or Freddie Mac) and an FHA/VA loans, have generated substantial improvements in housing affordability measures even as the deepening recession has taken a toll on median household income.

Surveys of consumer sentiment (University of Michigan) showed relatively large proportions of households saying in both January and February that it was a good time to buy a house, primarily because of low prices and low interest rates.

NAHB?EUR??,,????'???s proprietary survey of large single-family builders, available through February, is providing some tentative encouraging signs.

Seasonally adjusted gross sales (new orders) have been essentially flat since last November, and seasonally adjusted net sales showed a modest recovery over that period as sales cancellations continued to move downward in absolute terms.

NAHB?EUR??,,????'???s broad-based single-family Housing Market Index also was essentially flat during the November-February period, albeit at or near the record low for the series, and preliminary tabulations point toward more of the same in March.

NAHB?EUR??,,????'???s baseline forecast shows a bottoming-out of sales of both new and existing homes in the first quarter of this year, aided and abetted by key provisions of the economic stimulus bill that was signed into law on Feb. 17 ?EUR??,,????'??+ the $8,000 refundable, but not repayable, tax credit for first-time buyers and the boosting of loan limits for both the government-sponsored enterprises (GSEs) and FHA back to 2008 levels. ?EUR??,,????'??? Courtesy of NAHB