Pending home sales fell in April, breaking a run of three
consecutive monthly increases, the National Association of Realtors
(NAR) announced today.
Signed contracts for purchases of existing homes declined by 5.5
percent from their March level, according to the NAR, but showed an
annual gain of 14.1 percent over their April 2011 level. Pending
sales have now shown annual gains for 12 consecutive months.
Best year since 2007 expected
Despite the decline in month-to-month figures, NAR Chief
Economist Lawrence Yun said the momentum toward a housing recovery
continues and that the market conditions are fundamentally
"Housing market activity has clearly broken out at notably
higher levels and is on track to see the best performance since
2007," Yun said. "All of the major housing market indicators are
expected to trend gradually up, but a new federal budget must be
passed before the end of the year for the economy to continue to
He said a combination of higher taxes and sharp spending cuts
could severely curtail a housing recovery, reducing existing-home
sales from a currently projected 4.92 million units in 2013 to 4.50
The NAR is projecting 4.66 million existing home sales this
year, up from 4.26 in 2011.
Modest price increases predicted
A shrinking inventory of homes for sale is expected to help
boost national home prices this year, with the NAR projecting a 2-3
percent increase for 2012 and 4-5 percent in 2013. Local market
conditions are expected to vary widely; the NAR projects that the
foreclosure-battered markets of Miami and Phoenix will easily
exceed double-digit price increases by year's end.
Increasing prices would reduce the number of underwater
homeowners, those who owe more on their mortgages than their home
is worth. Yun said a 5 percent price increase would reduce the
number of underwater mortgage borrowers from its current 11 million
to about 9 million, while a 10 percent increase would reduce that
number to 7 million.
There are currently about 50 million homes with mortgages on
them, with another 25 million owned free and clear, according to
Pending home sales are considered a leading indicator for the
housing market and typically precede trends in completed home sales
by about two months, reflecting the time needed to close a sale
after the purchase contract is signed.
Originally published on MortgageLoan.com at: