Northeast home sales are poised for a big spring bounceby
In the latest sign of a bottoming real estate market, the National Association of Realtors said June 2 that its seasonally-adjusted index of sales contracts signed jumped for the third straight month, surging 6.7% in April compared to March and 3.2% compared to April 2008. It was the biggest monthly gain since October 2001 and the first year-over-year gain since August.
Pending home sales are considered a leading indicator because sales are typically finalized a month or two after contracts are signed.
Interestingly, the Northeast appears to be heading for a big bounce in home sales. The Pending Home Sales Index in the Northeast (made up of New England, New York, New Jersey and Pennsylvania) rose 32.6% from March and 0.8% from April 2008. Of course, not all of those contracts will lead to sales because mortgages can fall through and some contracts are contingent on a buyer selling a home elsewhere.
The Realtor group doesn’t breakdown the statewide pending home data but spokesman Walter Moloney told me that Maine, Rhode Island, and parts of New Jersey are beginning to “recover.”
It seems that the federal government’s $8,000 tax incentive for first-time buyers is working.
Vincent Valvo, group publisher The Warren Group, which puts out housing reports on New England, said first-time buyers are likely using the federal credit to buy foreclosed homes and other deeply-discounted properties.
But the activity does not yet constitute “such a wave that it will overcome all the housing problems we’ve had,” he said. “But it is better than it was.”
The state associations usually don’t track pending sales. But the Massachusetts Association of Realtors has just started collecting that data, though it doesn’t adjust for seasonal variations. For what it’s worth, single-family pending sales in Massachusetts increased 18.4% in April compared March but declined 8.5% compared to a year earlier.