Pending Home Sales on a Record Roll

For the fourth month in a row, the local home sales activity was up from one year ago. Comparing September 2008 to September 2009, 10.55% more homes were sold this year.

The inventory of homes available has shrunk over the past year from 9.74 to 7.4 months of inventory.  The National Association of Realtors says that six months of inventory is a balanced market. 

The graph below shows this year's activity.Homes Sold in Cincinnati - 2009

On a national basis, contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®. In the Midwest the index slipped 2.0 percent to 88.1 but is 8.1 percent above a year ago.

Nationally, the Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1.  The index is at the highest level since June 2007 when it was 100.7.

Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970.  

NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.  

NAR’s Housing Affordability Index stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago.  The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.