The National Association of Realtors (NAR) released its Pending Home Sales Index report for February 2013 on Thursday the 27th, and the future looks bright. Although this most recent Pending Home Sales Index reflected a slip in the number of residential contracts, the number is still higher than it has been in almost three years. The numbers are also up 8.4% over February 2012’s Pending Home Sales Index figures. The Pending Home Sales Index reports sales contracts and not home sales and is used by industry professionals as an indicator of future housing trends.
A familiar obstacle, low inventory remains the chief concern for home builders, prospective buyers and Realtors alike, with some agents complaining there just aren’t enough homes in their respective markets to show customers. NAR Chief Economist Lawrence Yun states that “housing starts need to rise at least 50% from current levels” to relieve the current inventory shortage. Yun also indicated that clearer regulatory rules allowing small banks and credit unions to do more construction loans would help shift housing starts in the right direction. The good news is consumer demand for homes remains high, a trend that has been steady over the past two years.
Another positive indicator mentioned in the Pending Home Sales Index was the NAR projection of 7 percent growth in existing home sales in 2013 to 5 million. The median home price for existing homes is also expected to surge 7 percent this year. The bottom line? Despite a minor decline in pending contracts due to low inventory, buyer interest and home values will continue to climb in 2013.
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