Pending Home Sales In March

Looks like there was a rise in the pending home sales index (PHSI) during the month of March. This  is likely attributed to home buyers’ improving confidence in the economy as more companies begin putting people back to work while housing prices are on a downward trend.

Shadow Inventory

The downtrend will still continue as the tremendous “shadow inventory” of houses have yet to be released by the banks.  These are repossessed properties which are in institutionally owned portfolios of assets, but aren’t presently listed for resale on the public market.

The National Association of Realtors (NAR) reported that the PHSI during the month of March rose 5.1% to 94.1 from 89.5 in February.  This is the second consecutive month the PHSI has increased, reaching its highest level since November 2010.  These figures don’t actually reflect the number of closings.

March Existing Home Sales

New and existing home sales were also up in March. Experts tend to agree that as people see the economy starting to rebound, they decide to make a move to enter into a contract to purchase a home.  In addition, when companies start hiring more, the number of potential home buyers increases with more people able to pay for larger purchases such as homes.

Despite this wave of activity, housing prices continue to fall.  While this make homes more affordable, others say if prices continue to fall, it may hurt the real estate market, possibly bringing it into a double-dip recession.

Bottoming Out?

Most predictions indicate it is too soon to tell when the market will “bottom out.”  Hopefully, lower pricing and more hiring will encourage hesitant home buyers to purchase.  As more homes are sold, inventory will decrease and prices will be pushed up, precluding the uncertain and elusive shadow inventory.

With any luck, the amount of home buyers will continue to increase and sales will go up, and then the shadow inventory will provide the housing needed to keep the market going in a positive direction without extensive pricing increases.  Here’s hoping!

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