Real Estate Outlook: Pending Sales Decline

This is great news for our Economy

The Pending homes sales posted a decline for the month of June, moving down 1.4 percent on the Pending Home Sales Index scale.
Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities.We have all been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors.

According to the Realtors Confidence Index, buyer traffic shows a large imbalance between buyer and seller interst. The index stands at a 60, with a value of 50 being neutral market conditions.

Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership.Regionally, the Northeast saw the largest decline -- falling 7.6 percent in June. The region is still 12.2 percent above year ago levels, though. The South has the second largest decline at 2.0 percent. The Midwest slipped 0.4 percent. The West was the only region that posted a gain -- rising 2.6 percent. All regional pending sales are above year ago levels.

Don't let this decline in contracts paint the entire real estate market gray, however. A total of 80 metro statistical areas across 32 states and the District of Columbia were listed as "improving markets" by the National Association of Home Builders/First American Improving Markets Index (IMI) for the month of August.

How does an area make the list? These metro areas must show improvement in housing permits, employment, and house prices for at least six consecutive months.

New additions for the August list were: Miami and Palm Bay, Fla.; Hinesville, Ga.; Terre Haute, Ind.; and Lubbock, Texas.

The fact that we continue to see a strong core of metros showing up on the improving list each month adds to the growing evidence that the emerging housing recovery has a solid foundation on which to build as housing returns to its traditional role of driving economic growth.

Nearly a quarter of all U.S. metros are currently designated as improving housing markets.