Current Events, Meltdown, National Association of Realtors, Pending Home Sales

Surprise! Pending home sales are up

From the Atlanta Investor Wire:

The number of signed contracts to buy a home unexpectedly rose last month to the highest level seen in eight months.

According to the National Association of RealtorsPending Home Sales Index released today, the number of contracts signed in June was up 5.3 percent from a downwardly-revised figure in May.

The jump in the Index came as a surprise. Economists had widely expected that home sales contract signings would decline by 1 percent.

Still, the number of pending home sales was 12.7 percent below last year’s levels.

In the south, pending sales jumped 9.3 percent from last month, but nevertheless were 16.6 percent below June 2007.

While an individual monthly increase does not signal that the end of the troubles in real estate has been reached, it is yet another encouraging sign that a bottom may be forming. Month-to-month price decreases as measured by Case/Shiller seem to be lessening, new home sales aren’t showing the precipitous monthly drops as they have in the past, and there is brand-new legislation from the federal government intended to shore up the ailing industry.

Still, it is unlikely that any bottom in the market will be followed by an immediate turnaround. The real question is: where does real estate go from here? Is the market going to follow the bottom before there is a gradual turnaround? Or are we poised on the brink of more severe and significant drops?

With the spillover of defaults and foreclosures only now hitting Alt-A and prime loans, it is looking more likely than not that we’ve just crested the first wave, and the next drop will be more severe and protracted than anything we’ve seen so far.

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