Two-Year High for Pending Sales

According to the National Association of Realtors, pending home sales rebounded, in May, to match the highest level in the past two years – 101.1, the same level as March 2012.  Based on contract signings, not closings, the association’s Pending Home Sales Index is an indicator of completed sales to come and marks 13th consecutive months of year-over-year gains.

Every region enjoyed both annual and monthly gains.  The index is the highest in the South, at 106.9.  However, the South also saw the smallest increase in the most recent reporting period.  One contributing factor for the smaller gain, may be the reduced inventory levels.  With fewer choices available to buyers, many are waiting for the shadow distressed inventory to hit the market.

Lower inventory results partly from higher sales in recent months depleting the existing supply and partly from underwater homeowners who are unwilling to list their homes.  Sales of such listings could result in lengthy short sales or require the sellers to bring additional cash to the closing table to complete the transaction.  It is estimated that 15% of all homeowners are in a negative equity position.

A combination of the current credit conditions and the low inventory levels are frustrating to buyers, particularly in the lower price ranges.  “If credit conditions returned to normal, and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” Yun said. “In an environment of historically favorable housing affordability conditions, it’s frustrating to see some consumers thwarted in the process.”

New housing construction helps to fill the void in the inventory.  Sarasota/Bradenton housing starts rose 60% during the first quarter of 2012.  Nationally the percentage is much lower.  Depending on quickly they come to market, the shadow short sale and foreclosure inventory will also fill the void.  However, if the slow-to-market trend for distressed property continues, the inventory shortages may continue.

Living in Sarasota March 2020

Living in Sarasota March 2020

Living in Sarasota, September 2019
A publication of S&N Real Estate, Inc.

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