Jun. 28, 2008 - Home Sales Forecast to Improve for Rest of '08
According to a recent forecast by the National Association of Realtors®, 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.
The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in April, rose 6.3 percent to 88.2. It’s the highest index since last October, but remains 13.1 percent lower than April 2007 when it stood at 101.5.
“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,” said NAR Chief Economist Lawrence Yun. “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.”
In the West, the PHSI rose 8.3 percent to 98.8 in April and is 4.0 percent higher than April 2007. In the Midwest, the index jumped 13.0 percent to 83.7 but remains 13.1 percent below a year ago. The South increased 4.6 percent to 88.8 but is 22.5 percent below April 2007. In the Northeast, the index declined 1.9 percent in April to 79.3 and is 12.2 percent below a year ago.
NAR’s housing affordability index has been trending up this year and is projected to rise 15 percentage points to 128.0 for all of 2008, the report said. The 30-year fixed-rate mortgage should rise gradually to 6.3 percent by the end of this year.
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