May 20 2009
Pending homes sales on the rise?
The National Association of Realtors® (NAR) on May 4 issued a report stating that the pending homes sales index was up for March.
The NAR’s Pending Homes Sales Index is based on contracts signed in March and showed an increase of 1.1 percent over March 2008. The index is based on national pending sales and can be found on the Internet in the news releases section listed at www.realtor.org/press_room.
In Arkansas, the March sales figures were still drifting in to the offices of the Arkansas Realtors® Association so it’s impossible to say for sure whether that month was a booming one for Arkansas markets. However, there is enough anecdotal evidence out there to suggest that Realtors® in the Natural State are at least optimistic (editor’s note — the Arkansas March homes sales report is out now).
According to some Arkansas Realtors® and reports from the NAR, first time homebuyers are driving a lot of sales now. Specifically, almost half of all homes sold these days are to first time homebuyers, the NAR said.
What’s bringing them to the market? There are at least three things that are convincing people to purchase homes. First of all, there has been downward pressure on prices for over a year now. The latest finalized report for Arkansas is from February when the average sales price across the state was $141,349 – down 3.5 percent from $146,487 in February 2008.
Arkansas real estate agents have said that continued, downward pressure on prices has convinced some of the “fence sitters” that the current climate is a good one in which to purchase a home.
Second, there’s the $8,000 tax credit for first time homebuyers to consider. Generally, people who haven’t owned a primary residence in the past three years and individuals making less than $95,000 per year ($190,000 for couples) can take advantage of the tax credit. Eligible homebuyers purchasing a house from Jan. 1 through Nov. 30 can take advantage of the tax credit.
That credit, by the way, is in the form of a check from the government for 10 percent of the purchase price of the home or $8,000 – whichever amount is smaller – and does not have to be repaid.
Furthermore, mortgage rates are at historic lows, coming in at less than 5 percent on a 30-year, fixed rate mortgage. How much of a bargain is that rate? Low enough that banks have reported refinancing mortgages that were taken out a mere six months ago because people applying for them found they could save money in the long run in spite of closing costs.
Bear in mind that no one is claiming the market is back to normal and that we’ll see no more market corrections. However, there are more than a few Realtors out there who say that we know better days are ahead when we see more activity in the lower price ranges.
Those are the price points where first time homebuyers tend to shop and there has been a lot of activity among buyers looking at homes costing around $150,000 or less. For that reason, a number of Arkansas Realtors® are cautiously optimistic.
House to House is a weekly column I write on behalf of the Arkansas Realtors Association . It is picked up by about 20 newspapers and publications in Arkansas.
