Good Monday Morning!
There is some good news coming out in regards to the national Real Estate Market. This is very welcome news following months of nothing but negative news. Nationally, pending home sale were up in December of 2022. This is an indicator that possibly home sales will improve in January. Pending sales typically will become closings within 30-45 days. Lower mortgage interest rates may be the primary reason for the increase in pending sales. Demand for homes is high and any downward shift in mortgage rates will result in more pending sales and ultimately more closed sales. Many economists now believe that we are going to continue seeing home values decrease. This would be the typical scenario in any slower housing market and one that really has not picked up steam yet. My guess is that we will see home values decline over the coming year. The extent of the decline is unknown, but it could help lead to better home sale numbers if mortgage rates do not increase dramatically. I continue to believe that home sellers have a short window to sell their homes at top dollar value before a more intense decline in home values hits. For anyone thinking about selling a home this year, my advice is to not wait. The following is a recent article from "Realtor.com" in regards to the good news of an increase in pending home sales nationally.
The numbers: U.S. pending-home sales rose 2.5% in December, reversing a six-month losing streak, according to the monthly index released Friday by the National Association of Realtors (NAR).
Pending home sales were down for six months in a row, as the U.S. Federal Reserve increased interest rates and mortgage rates took off.
Pending-home sales beat analyst expectations. Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 1%.
Contract signings rose in the South and the West.
Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed.
Economists view it as an indicator for the direction of existing-home sales in subsequent months.
Mortgage application activity hints at the housing market’s further recovery. Mortgage demand rose in the latest week.
Key details: Compared with a year earlier, transactions were down by 33.8%.
On a monthly basis, pending sales rose in the South and the West. Sales dropped in the Northeast and Midwest.
Pending home sales fell the most since last December in the West, by 37.5%.
Big picture: A dip in rates has boosted demand for mortgages. Buyers are coming back to the market, and the housing market is slowly recovering. But inventory remains low, as sellers hold out. Many are looking to the spring to see if sellers are motivated to list their homes.
What the realtors said: “This recent low point in home sales activity is likely over,” NAR Chief Economist Lawrence Yun said. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
Yun expects mortgage rates to hover between the 5.5% and 6.5% range.
He also expects the South to outperform in terms of sales, since the job market is stronger in the region.
What they’re saying: “Home sales have now largely adjusted to the collapse in demand since late 2021. … [but] a sustained recovery likely remains a long way off,” Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, wrote in a note.
“The downturn in sales is coming to an end, but the decline in home prices is only just getting underway,” he added. He expects home prices to fall 15% over the next year.
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