By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
Pending home sales reached their highest level in January in nearly two years, according to NAR’s report this week, rounding out a handful of positive news for housing markets in the last week or two.
Pending sales trending upward is an interesting trend to watch considering the recent rise in cancelled contracts. I say this because pending sales at least gives us an indicator of buyer sentiment since many of the failed contracts seem to be due to things that are out of buyers’ control like not securing financing needed to purchase the home or the appraisal coming in below the contract price. With a rise in pending sales, we at least know that buyer intent is on the rise and more folks are trying to buy homes.
NAR’s pending home sales index was up 2% to 97 in January from 95 in December, and is 8% higher than January 2011. The January index is the highest since April 2010, when it reached 111.3 as buyers were in a mad dash to take advantage of the home buyer tax credit.
Other positive happenings for housing:
Improving job market: In January, unemployment hit its lowest level in three years, continuing a five-month streak of improvement. Without jobs, people don’t buy or move so this obviously is a good thing.
Home builders are gaining confidence: Home builder sentiment, tracked by the National Association of Home Builders and Wells Fargo, in February reached its highest level in nearly five years. This basically means that home builders are more confident that market conditions are improving to the point that new home sales will be positively impacted.
Housing stocks are up: The stock market is a far-from-perfect indicator, but it at least gives a reading of how investors are feeling. The nation’s home builder companies have seen share prices increase 60% since October, according to ananalysis on Time’s website.
In the Bay Area, we have all the amazing economic trickledown activity from major tech company IPOs – recently game developer Zynga and Facebook’s pending IPO in May – to look forward to in housing. In fact, some of our local markets such as San Francisco have already seen the positive housing news that comes along with that.
Overall, 2012 is looking to be a great year for housing compared to the last five or six. The presidential election likely will also ward off any major controversial policies that could negatively impact the market. With all this in mind, I think we’re looking at our big comeback year. It will be particularly good for certain segments of our local markets and marginally improved at the national level. Not a boom by any means, but we’ll take it!