Modest near-term movement is expected in existing-home sales, with a recovery in sales seen during the second half of the year. The Pending Home Sales Index, NAR’s forward-looking indicator based on contracts signed in May, fell 4.7 percent to 84.7 from an upwardly revised reading of 88.9 in April, and remains 14.0 percent below May 2007 when it stood at 98.5. Some pullback after a sharp increase in the previous month was expected. The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Congress is critical to assure a healthy recovery in the housing market, jobs and the economy.

But location has never mattered more than in the current market. Look at the pending home sales index for the West. While it’s true the index slipped 1.3 percent to 97.5 in May in that region, it was 2.0 percent higher than it was in May of 2007. Indeed, some markets have seen a doubling in home sales from a year ago, while others are seeing contract signings cut in half. For instance, double-digit pending sales gains in May from a year ago were noted in Colorado Springs CO, Sacramento CA and Spartanburg SC. In addition, price conditions vary tremendously, even within a locality, depending upon a neighborhood’s exposure to subprime loans.

Current real estate market conditions are positive for most buyers: still-attractive interest rates, a large inventory of homes available for sale, and many sellers willing to negotiate their prices. And in spite of the headlines surrounding issues with Fannie Mae and Freddie Mac, as well as the recent federal “takeover” of IndyMac, there is still mortgage capital out there. Credit may be tightened, but lenders are still happy to originate a mortgage loan to households who qualify. And remember: owning a home still provides long-term value, and most buyers today plan to remain in their homes for five or more years. Home buyers can get a great deal right now.

The U.S. Senate passed a bipartisan mortgage rescue bill on Friday that allows the Federal Housing Administration to refinance troubled mortgages - even those that are under water - as long as banks agree to take a loss.

The program would allow the FHA to help as many as 400,000 homeowners.

Now the bill goes to a bipartisan committee in the House for revision. Rep. Barney Frank (D-Mass.), the Financial Services Committee chairman and a primary supporter of the bill, says the few but significant revisions House leaders seek could be made in as little as one week.

The measure includes higher limits for FHA loans and creates a new regulator for Fannie Mae and Freddie Mac. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time homebuyers.

NATIONAL ASSOCIATION OF REALTORS® President Richard F. Gaylord said the bill “is a big step toward helping people buy and keep their homes.

“We are eager for the House and Senate to come together to finalize an aggressive bill that will ensure that every American who can afford to own a home and wants to do so will have the opportunity, and that every American who responsibly owns a home is able to keep it,” Gaylord said.

NAR has expressed ongoing support for many of the provisions in the legislation, including Federal Housing Administration Modernization that will make FHA-backed mortgages more available, a tax credit for first-time homebuyers, reform of Fannie Mae and Freddie Mac, and a program to expand FHA that would allow more mortgages to be refinanced.

“The tax credit for first-time home buyers would be a strong stimulus to a weak housing market, and FHA stabilization should help thousands of families refinance existing mortgages and in many cases keep their homes,” Gaylord said.

Modest near-term movement is expected in existing-home sales, with a recovery in sales seen during the second half of the year, according to the latest forecast. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in May, fell 4.7 percent to 84.7 from an upwardly revised reading of 88.9 in April, and remains 14.0 percent below May 2007 when it stood at 98.5.

Lawrence Yun, National Association of Realtors (NAR) chief economist, said some pullback after a sharp increase in the previous month was expected. “The overall decline in contract signings suggests we are not out of the woods by any means. The housing stimulus bill that is still being considered in the Senate is critical to assure a healthy recovery in the housing market, jobs and the economy,” he said.

If your Realtor doesn’t ask you, tell your Realtor what you want in a home!

• Number of bedrooms and bathrooms.
• Size of the home (square footage).
• Floor plan style - one level, two levels, open floor plan?
• Size of garage or number of cars.
• Do you want a pool or spa or both? Screened or not?
• If you don’t want a pool, do you want a screened patio?
• Size of parcel or lot, acreage.
• Age of home. Is age an issue, or is an updated older home OK?
• Type of construction.
• What type of neighborhood do you want your family in?
• Do you want to be in a planned community with restrictions and community amenities?
• Are schools important?
• What type of “travel commute” time do you prefer to get to work each day?
• Tell me what you want in your kitchen.
• Do you want a fenced backyard?
• Do you want a fireplace?
• Is it important that the master suite be on the first floor?
• Do you prefer a split bedroom floor plan?
• Will you do a lot of entertaining? Need a formal dining room or summer kitchen?
• Do you want a luxury master bath with two sinks, shower and jetted tub?
• Surfaces - Wallpapers? Flooring? Countertops?
• Any bells and whistles. Tell the extras you like such as irrigation system, alarm system, sound system, crown molding, high ceilings, etc.?

Sales of existing-home sales increased in May with buyers responding to lower home prices.

Existing-home sales increased 2 percent to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.
NAR President Richard F. Gaylord says buyers are seeing value in the current housing market. “Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages,” he says. “Today’s buyer plans to stay in a home for 10 years, which is a good strategy for building long-term wealth.”

Housing Inventories

Lawrence Yun, NAR chief economist, says there’s still a lot of inventory in the market. “The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down,” he says. “Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices.”

Sales Activity Picks Up

Although conditions remain mixed around the country, unpublished snapshot data shows a number of areas are experiencing much higher sales activity than May 2007, including Sacramento, the San Fernando Valley and Monterey County in California; Sarasota, Fla.; and Battle Creek, Mich.

“Keep in mind that the volume of home sales is the primary driver of economic activity that is tied to housing,” Yun says. “It’d be premature to say the improvement marks a turnaround. The market is fragile, so a first-time home buyer tax credit and a permanent raise in loan limits would be important steps to get the housing engine humming.”

Single-family home sales rose 1.6 percent to a seasonally adjusted annual rate of 4.41 million in May from 4.34 million in April, but are 14.5 percent below the 5.16 million-unit pace in May 2007.

By Region

Midwest: rose 5.5 percent in May to a pace of 1.16 million but are 16.5 percent lower than a year ago. Median price: $165,300, which is 0.7 percent below May 2007.

Northeast: rose 4.6 percent to an annual rate of 910,000 in May, but are 15.0 percent below May 2007. Median price: $278,000, down 2.4 percent from a year ago.

West: increased 2 percent to an annual pace of 1.02 million in May, but are 12.8 percent below a year ago. Median price: $286,600, which is 16 percent lower than May 2007.

South: slipped 0.5 percent to an annual rate of 1.91 million in May, and are 17 percent below May 2007. Median price: $175,000, down 4.3 percent from May 2007.

Source: NAR