The reading for pending home sales in June is showing a continued return to of housing, or at least that the worst is over. The June figures came to +3.6%, marking the fifth consecutive month of gains. That National Association of Realtors said the 3.6% gain came to a reading of 94.6, and even May was revised to +0.8% from +0.1% originally reported. The reading is also up 6.7% from the June 2008 reading of 88.7. The most interesting aspect is what the Association says about prices.
The reasons cited are the obvious: historically low mortgage rates,
affordable home prices, and a large supply of house choices. The Housing Affordability Index came in at 159.2, which is down from record peaks but is 36.6 percentage points above a year ago.
Interestingly enough, this also notes a “monthly rise in home prices…” It is possible that some of this is first timers. As closing on a house can take 45 to 60 days, there is a chance that some of this is for the tax credit. Those seeking the $8,000 tax credit may be motivated to be in the “pending” line because they have to close on the sale by November 30 to be eligible.
This noted that a median-income family making $60,700.00 could afford a $289,100.00 house in June. That is based upon a 20% downpayment, and assumes that 25% of gross income is devoted to mortgage principal and interest.
The affordability conditions for first-time buyers with that same income and small downpayments are roughly 80% of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June of $181,600.00.
How many families with $60,700.00 of income have a down payment of $57,820.00? Maybe no one is as pinched as we all thought…..
JON C. OGG
AUGUST 4, 2009
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