According to the Pending Home Sales Index last month showed an increase in pending contracts for existing home sales. November’s figures are up 3.5% over October of 2010. This figure refers to contracts, not closings, so there is a lag of 1 to 2 months, but it is a good indicator.
NAR’s Chief economist Lawrence Yun cites the historically high housing affordability as a major factor, and expects the trend to continue as the general economy improves which also brings more buyers to the market. We have not reached “normal” levels yet, but are improving.
The western US showed the highest gains with an increase of 18.2% with the Northeast showing 1.8% improvement and the south slipping 1.8% lower. As the economy improves so should these numbers. 2011’s forecast is calling for unemployment to drop to 9.2% and mortgage rates are expected to raise to 5.3% by year end.
“All the indicators are pointing to a gradual housing recovery” Yun said. As the bank owned foreclosures continue to hit the market home prices are expected to remain stable.
How does this effect us? As the housing market improves so does the economy. As the economy improves so does the housing market. The two work together and as one as one does not radically outpace the other our economic health should continue to improve.
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