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Pending Sales Up 6.3% in April (June 9)
A modest gain in the level of home sales is possible over the next couple months, and an improvement is forecast for the second half of this year as more buyers are able to access affordable mortgages, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.3% to 88.2 from a reading of 83.0 in March. It’s the highest index since last October, but remains 13.1 percent lower than April 2007, when it stood at 101.5.

Lawrence Yun, NAR chief economist, says pending sales contracts have picked up notably in areas undergoing significant price drops.

“Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it’s unclear if they are investors or owner-occupants,” he says. “Sharp price reductions are leading to a quicker discovery of price equilibrium points. The West is already seeing year-over-year gains in pending contracts.”

Here are some other market predictions from Yun and NAR:

• Yun said the underlying fundamentals point to a pent-up demand. “Home sales are at about the same level as they were 10 years ago, yet the population has grown by 25 million people and we have over 10 million more jobs,” he said. “The housing market has been underperforming by historical standards, partly because buyers were hampered by mortgage availability issues, but that’s improved and an upturn is more likely. On the other hand, it’s unclear what role consumer confidence will play in the coming months.”

• Existing-home sales should increase from an annual pace of 5.05 million in the second quarter to 5.83 million in the fourth quarter. For all of this year, existing-home sales are expected to total 5.40 million, and then rise 6.3 percent to 5.74 million in 2009. “Sales gains will be greatest in areas that underwent sharp price declines,” Yun said.

• After unprecedented home price declines in the first half of the year, many markets can anticipate stabilizing price trends in the second half. The aggregate median existing-home price is likely to decline 8.4 percent in the first half of this year, and then begin to stabilize in the second half before rising 4.4 percent next year.

• Yun sees an improving economy. Growth in the U.S. gross domestic product (GDP) should be 1.7 percent in 2008 and 2.0 percent next year. The unemployment rate is estimated to average 5.3 percent this year and 5.6 percent in 2009.

Cramer Says Housing Will Rebound

Jim Cramer on CNBC Tuesday, May 27, said that housing can, and will eventually, rebound. It’s completely within the realm of possibility that in a year or two people will be regretting not buying homes in some of the worst-hit Florida markets since prices have come down so substantially.

See the article in the Castle Commentary, but also see below for excerpts from two more articles. The mood is beginning to change.

Is Florida Housing Slump at the Bottom?

by Brett Arends (New York Times, May 6, 2008)

Is it time, at long last, to head down to Florida to start looking at homes?

Maybe.

New housing starts have at last slumped below the seemingly magical one million mark. That happened in March. Every time that has happened in the last 50 years, it proved to be the bottom of a recession.

It is really remarkable how much where we are today looks like the bottom we've had in the last three cycles... Every time we've gone below a million starts, the market has cleared at that moment.

Prices may still fall further. Yet if you are tempted to keep waiting for homes to get a lot cheaper, there are several reasons to think that might not happen.

First, there are too many other bargain hunters out there. Second... there are plenty of people in Europe for whom Florida is now a bargain. Third, interest rates are low right now... Finally, in an age of weak currencies and rising inflation, "real" or "hard" assets are in demand...

The Housing Crisis is Over

by Cyrille Mouelle-Berteaux (New York Times, May 6, 2008)

The dire headlines coming fast and furious in the financial and popular press suggest the housing crisis is intensifying. Yet it is likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now...

Most people forget that the current housing bust is nearly three years old. Homes sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982. Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust. Affordability...