With home ownership trends indicating that more and more young people are opting to rent apartments instead of buying homes, it may come as a surprise to learn that pending home sales in the United States are actually on the rise. This is certainly a stark reversal of the trend from just a few months ago, when sales of previously owned houses in the US were declining at an alarming rate.
A “pending home sale” is a contract to buy a previously owned home. When a person makes an offer on a house and the seller executes the contract, the property goes into “pending” status. The number of pending home sales in the US, which is based on the number of contract signings in a given month, is typically used as a forward-looking indicator of the real estate market.
According to the National Association of Realtors, the largest trade association in the U.S. with more than one million members, pending home sales increased by more than five percent in April 2016. (April is the most recent month included in the report because the numbers are based on contracts signed during the previous month.) Moreover, the National Association of Realtors’ latest index of pending home sales indicates that these types of real estate purchases have reached their highest level in more than a decade.
These numbers probably come as quite a shock to many economic experts. At the beginning of May, Reuters conducted a poll of economists, with respondents forecasting only a minor bump in pending home sales.
When broken down geographically, the pending home sales index shows that pending home sales in the East region, which includes New York and New Jersey, are going up every month. The numbers were even higher in the South and West regions. In fact, pending home sales increased in three of the country’s four regions, with only the Midwest showing a minor decline over the previous month. (However, pending home sales in the Midwest are still up more than two percent over the previous year.)
Will the Pending Home Sales Trend Continue?
One of the reasons for the major upward trend in pending home sales is the strength of the economy, with mortgage rates now nearing all-time lows and employment numbers looking great through last month.
Of course, that could soon change, with the U.S. Department of Labor recently indicating that employment numbers were lower than expected in May. It remains to be seen, however, whether the latest jobs report will have a negative impact on home sales across the country.
Lawrence Yun, the chief economist for the National Association of Realtors, noted that the ability of prospective homebuyers to sign a contract on a house has exceeded expectations “even with the affordability stresses and inventory squeezes affecting buyers in a number of markets.” Yun’s comments suggest that this trend could continue even in the face of some economic adversity.
For more information, read the Yahoo.com article, “US Pending Home Sales Jump to Highest Level since Early 2006.”
If you are thinking about buying a home in New Jersey, it is imperative that you make sure you are free of any serious debt before you make an offer on a house. Joel R. Spivack, Esq., is an experienced real estate and bankruptcy lawyer who will help you throughout the home buying process. Contact Mr. Spivack today to schedule a free consultation.