Monday, December 22, 2014

A positive sign perhaps?

Agreements of sale for resales are higher nationally and regionally. Free of government intervention, the higher numbers may be a better indicator of the future of the existing home market.

A positive sign perhaps?

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  The number of sales agreements signed for existing homes rose 10.4 percent in October from September and is 9.2 percent above October 2010, the National Association of Realtors reports.
  In the eight-county Philadelphia region, Prudential HomExpert Report says October’s sales agreements were 11.1 percent above September and 3.8 percent more than the same month in 2010.
  The national figures are based on an index, but the eight-county region’s reflects actual numbers — 2,884 contracts in September, 3,205 in October, or a gain of 321 agreements month-to-month.
  What’s more important about the region’s numbers is that they might be a more reliable indicator of the future of the resale market here than those recorded  in October 2010 and 2009.
  The reason: The government is not directly involved in propping up sales with tax breaks. 
  October 2011’s numbers are 3.8 percent higher than the same month in 2010, or 3,205 versus 3,088. Last autumn’s market was still shaking off the effects of the end of the federal tax credit that primarily benefited resales.
   In October 2009, when the first tax credit was due to expire the following month (it was extended to April 30, 2010), the number of contracts reached 4,641, compared with 2,911 in the tax-credit-free, but post-financial meltdown month of October 2008.
   The fact that the number of contracts is higher, and that Washington is not waving $8,000 credits in front of buyers to create a spree, makes the figures a more reliable indicator of “pending sales” — the Realtors’ term for agreements scheduled to go to closing 45 to 60 days after signing.
   When the tax credits were in place, it was tough for economists to predict sales from the contract data, so we were treated to lots of sunny forecasts that turned quickly to gloom.
   Maybe now they can at least be safe with partly cloudy.
   Maybe.

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About this blog
Alan J. Heavens blogs about home improvement and the real estate industry and hosts regular chats on those topics. Reach Alan J. at aheavens@phillynews.com.

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