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Vero Beach Pending home sales up for third
month
Vero Beach Homes for Sale
Record low mortgage interest rates boosted pending home sales
for the third consecutive month, with some benefit now from the
first-time buyer tax credit, according to the National
Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based
on contracts signed in April, rose 6.7 percent to 90.3 from a
reading of 84.6 in March, and is 3.2 percent above April 2008
when it was 87.5.
“Housing affordability conditions have been at historic highs,
but now the $8,000 first-time buyer tax credit is beginning to
impact the market,” says Lawrence Yun, NAR chief economist.
“Since first-time buyers must finalize their purchase by Nov.
30 to get the credit, we expect greater activity in the months
ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6
percent to 78.9 in April and is 0.8 percent above a year ago.
In the Midwest the index rose 9.8 percent to 90.4 and is 11.1
percent above April 2008. The index in the South slipped 0.2
percent to 93.0 in April but is 3.5 percent higher than a year
ago. In the West, the index rose 1.8 percent to 94.8 but is 2.9
percent below April 2008.
NAR President Charles McMillan says there are numerous buyer
assistance programs around the country. “Some states are
offering bridge loans that allow first-time buyers to use the
tax credit for downpayment and closing costs, but there are
many other local government and nonprofit programs available to
buyers, depending on location.
“Just last week, HUD announced that qualifying buyers can use
the tax credit for closing costs on FHA loans to buy down the
interest rate or make a larger downpayment.”
NAR’s Housing Affordability Index (HAI) is in record territory.
The index rose to 174.8 in April from an upwardly revised 171.9
in March, and was the second highest monthly reading on record
after peaking at 176.9 in January of this year. The HAI is a
broad measure of housing affordability using consistent values
and assumptions over time, which examines the relationship
between home prices, mortgage interest rates and family income.
Tracking began in 1970.
A median-income family, earning $60,900, could afford a home
costing $296,800 in April with a 20 percent downpayment,
assuming 25 percent of gross income is devoted to mortgage
principal and interest. Affordability conditions for first-time
buyers with the same income and small downpayments are roughly
80 percent of that amount. The affordable price was well above
the median existing single-family home price in April, which
was $169,800.
Yun cautions that the reporting sample for pending home sales
is smaller than that of existing-home sales, so it is subject
to greater variability.
“In addition, the relationship between contracts on pending
home sales and closings on existing-home sales is taking longer
than in the past for several reasons,” Yun says. “Mortgage
processing time has increased, it is taking many months to
close on those homes requiring short sales with lender
approval, and some sales are falling through at the last
moment.”
The total number of existing-home sales is expected to improve
but with dramatic local market variation in the timing of
recovery. “The market has already bottomed in some areas, but
this is an unusual housing cycle with some areas improving
rapidly while others languish or decline,” Yun
says.
by Alfred Koenig - May 2009
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