Los Gatos Weekly-Times

Homes

The Real Deal

Pending home sales index rises in June

Pending home sales, a leading indicator for the housing sector, have risen for the second straight month, according to the National Association of Realtors.

The Pending Home Sales Index is used as a yardstick for future home demand. Based on contracts signed in June, the index increased 0.4 percent to 113.9 from May's 113.5 level. The index was 9.6 percent below the level of June 2005.

The index is based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

The small rise in the index is good news because it is an indication the trend is stabilizing, according to David Lereah, chief economist for the Realtors.

"Once again, we have various housing indicators moving in different directions, which itself is an indicator of a market in transition," Lereah said. "The housing market is striving for balance--a process that will take several months. A quieting in the movement of indicators should restore confidence to home buyers who've been on the sidelines, waiting for the right time to get into the market, and now is the best time we've seen since the 1990s in terms of housing choices and flexible terms."

Regionally, the pending homes-sales index in the South rose 2.5 percent in June to 130.7 but was 4.8 percent below June 2005. The index in the Midwest increased 1.9 percent to 103.3 in June but was 11.9 percent below a year ago. The index in the West was unchanged, holding at 110.1 in June, and was 14.2 percent lower than June 2005. In the Northeast, the index dropped 6.3 percent in June to 99.4 and was 11.6 percent below a year ago.

In late July, the industry group reported sales of existing homes in the United States fell a ninth time in 12 months, declining 1.3 percent to a 6.62 million annual rate in June. Year over year, sales were down 8.9 percent. The average 30-year mortgage rate was 6.68 percent in June, compared with 6.60 percent in May and 5.58 percent in June 2005. The inventory of homes on the market increased to 6.8 months from 6.4 months in May. The median home price climbed to $231,000.

As the market changes, it becomes more important for sellers to price their homes right and show the very best features of their home.

"Your home needs to be perfect" in order to compete with other homes like it, Silicon Valley Association of Realtors director Aileen LaBouff always advises sellers. LaBouff is a Realtor with Coldwell Banker and Los Altos/Mountain View District chair of the association. She is also an accredited staging professional and senior real estate specialist.

"Staging a home," LaBouff said, "brings out its best qualities."

Stefan Walker, a Realtor with Alain Pinel Realtors in Los Gatos, said, "These days, homes in the entry level market are still receiving multiple offers. Higher priced properties are seeing less demand. Sellers of these properties need to be very careful about pricing their homes. Pricing is the key."

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to rmeily@silvar.org.