Daily Real Estate News June 23, 2009
Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and a first-time buyer tax credit, according to the NATIONAL ASSOCIATION OF REALTORS ®. May’s increase was the first back-to-back monthly gain since September 2005.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million units in May from a downwardly revised level of 4.66 million units in April. Sales remained 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, expected an improvement in sales. “Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Yun says. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.
Poor Appraisals Stall Transactions
However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.
Total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
Yun says the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he says. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
NAR President Charles McMillan says appraisals and the tax credit are key issues. “To maximize the potential for a housing recovery and subsequent economic recovery, we need realistic appraisals that are based on proper comparisons and done by a local specialist,” he said. “In addition, the first-time buyer tax credit should be expanded to all buyers of primary homes regardless of income. Extending the credit into 2010 would allow more time for the market to catch up with underlying demand, in part because many families with children, who normally time their purchase based on school year considerations, do not have enough time to move before the start of school in late August.
“Freeing a pent-up demand in housing will absorb inventory at a faster pace, strengthen communities and stabilize home prices earlier,” McMillan said.
A Closer Look at May Housing Data
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago. “This is the time of year when we see large increases in the number of repeat buyers, who are benefiting from sales to entry-level buyers,” Yun says. “Investors appear less active, but are more prevalent in areas with large price corrections.”
National median existing-home price: for all housing types was $173,000 in May, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. “The decline in the distressed sales share likely results from an increase of repeat buyers in May,” Yun says. “First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales.”
Single-family home sales: rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3 percent below the 4.38 million-unit level in May 2008. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.
Existing condominium and co-op sales: increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
By the RegionHere’s how housing fared across the country for existing-home sales:
Northeast: rose 3.9 percent to an annual level of 800,000 in May, but are 10.1 percent below a year ago.
Median price: $243,600, which is 12.5 percent below May 2008.
Midwest: jumped 9 percent in May to a pace of 1.09 million but are 4.4 percent below May 2008.
Median price: $145,800, which is 10.4 percent lower than a year ago.
South: unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago.
Median price: $157,400, down 9.9 percent from May 2008.
West: slipped 0.9 percent to an annual rate of 1.14 million in May, but are 11.8 percent higher than May 2008.
Median price: $197,700, down 30.6 percent from a year ago.
Source: NAR
Friday, June 26, 2009
Home Buyer Tax Credit Could Expand
Daily Real Estate News June 22, 2009
A first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle. Now both legislators and the business community are hoping to build on the incentive's success by expanding it. A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes:
Setting a new cap of $15,000.
Extending the tax break into mid-2010.
Making the benefit available to all home buyers, not just first-timers.
Offering a separate tax credit to $3,000 for borrowers who refinance.
USA Today, Stephanie Armour (06/22/09)
A first-time home buyer tax credit of up to $8,000 has helped to move housing inventory during an otherwise sluggish real estate cycle. Now both legislators and the business community are hoping to build on the incentive's success by expanding it. A number of bills have been introduced in the House and the Senate that lobby for an expansion of the measure. Among the proposed changes:
Setting a new cap of $15,000.
Extending the tax break into mid-2010.
Making the benefit available to all home buyers, not just first-timers.
Offering a separate tax credit to $3,000 for borrowers who refinance.
USA Today, Stephanie Armour (06/22/09)
Top Rising, Falling Housing Markets
Daily Real Estate News June 26, 2009
When the recovery in housing finally comes, some housing markets will rebound sooner than others.
Real estate forecasting service Local Market Monitor, which covers the nation’s 300 largest markets, has identified 13 markets where it predicts home prices will rise in the coming months and 11 markets where it expects home prices will continue to decline significantly.
To make these picks, Local Market Monitor uses a proprietary formula.
Here are the 13 markets where it expects prices to rise:
Baton Rouge, La.
Buffalo-Niagara Falls
Dallas-Plano-Irving
Fort Worth-Arlington
Houston-Sugar Land-Baytown
Little Rock-North Little Rock-Conway, Ark.
McAllen-Edinburg-Mission, Texas
Oklahoma City
Rochester, N.Y.
San Antonio
Syracuse, N.Y.
Tulsa
Wichita, Kan.
Here are the 11 markets where it believes home prices will continue to decline:
Bakersfield, Calif.
Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.
Fresno, Calif.
Las Vegas-Paradise
Miami-Miami Beach-Kendall
Orlando-Kissimmee
Oxnard-Thousand Oaks-Ventura, Calif.
Phoenix-Mesa-Scottsdale
Riverside-San Bernardino-Ontario, Calif.
Stockton, Calif.
West Palm Beach-Boca Raton-Boynton Beach, Fla.
Source: Local Market Monitor (06/23/2009)
When the recovery in housing finally comes, some housing markets will rebound sooner than others.
Real estate forecasting service Local Market Monitor, which covers the nation’s 300 largest markets, has identified 13 markets where it predicts home prices will rise in the coming months and 11 markets where it expects home prices will continue to decline significantly.
To make these picks, Local Market Monitor uses a proprietary formula.
Here are the 13 markets where it expects prices to rise:
Baton Rouge, La.
Buffalo-Niagara Falls
Dallas-Plano-Irving
Fort Worth-Arlington
Houston-Sugar Land-Baytown
Little Rock-North Little Rock-Conway, Ark.
McAllen-Edinburg-Mission, Texas
Oklahoma City
Rochester, N.Y.
San Antonio
Syracuse, N.Y.
Tulsa
Wichita, Kan.
Here are the 11 markets where it believes home prices will continue to decline:
Bakersfield, Calif.
Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.
Fresno, Calif.
Las Vegas-Paradise
Miami-Miami Beach-Kendall
Orlando-Kissimmee
Oxnard-Thousand Oaks-Ventura, Calif.
Phoenix-Mesa-Scottsdale
Riverside-San Bernardino-Ontario, Calif.
Stockton, Calif.
West Palm Beach-Boca Raton-Boynton Beach, Fla.
Source: Local Market Monitor (06/23/2009)
Saturday, June 13, 2009
Ecovillage to open in London Grove
A new housing development is being proposed in London Grove that would feature homes where nobody has to pay an electric bill and a clubhouse where residents prepare and eat a communal dinner a few nights a week. The cohousing community, where people would live in their own homes but share communal facilities, would also be built with an eye toward being environmentally sustainable, incorporating features that will earn it a LEED certification, a green building standard of the U.S. Green Building Council.
Known as an ecovillage, all the houses will utilize solar and geothermal energy for their heating and cooling.
Known as Three Groves Ecovillage, the development would be located on a 7.5 acre parcel on the corner of Prospect Avenue and West State Street. The approval process for the development will take about a year and investors are hoping the first construction would begin in the later part of 2010.
Source: Daily Local; 6/7/09
Known as an ecovillage, all the houses will utilize solar and geothermal energy for their heating and cooling.
Known as Three Groves Ecovillage, the development would be located on a 7.5 acre parcel on the corner of Prospect Avenue and West State Street. The approval process for the development will take about a year and investors are hoping the first construction would begin in the later part of 2010.
Source: Daily Local; 6/7/09
Norristown movie studio receives recommendation from planning commission
The $100 million Studio Centre renovation of the former Logan Square Shopping Center on Markley Street received a unanimous recommendation from the Norristown Planning Commission this week. Norristown’s council is expected to consider the final site plans at its next meeting on June 16. Council’s approval of the plan is contingent upon a $10 million direct state subsidy and an $8 million tax increment financing (TIF) plan that requires the approval of Norristown, Norristown Area School District and the Montgomery County Commissioners.
The current plans for the studio include 72,000-square-feet of studio space divided into five soundstages, 98,000 square-feet of movie support space, a 50,000 square-foot supermarket and 20,000 square-feet of new retail space.
If final approval is granted and the movie studio construction moves forward, area leaders expect this to be a catalyst to jumpstart Norristown’s revitalization.
Source: The Times Herald; 6/10/09
The current plans for the studio include 72,000-square-feet of studio space divided into five soundstages, 98,000 square-feet of movie support space, a 50,000 square-foot supermarket and 20,000 square-feet of new retail space.
If final approval is granted and the movie studio construction moves forward, area leaders expect this to be a catalyst to jumpstart Norristown’s revitalization.
Source: The Times Herald; 6/10/09
Friday, June 12, 2009
Top 10 Best Places to Live U.S.
Daily Real Estate News June 10, 2009
News & World Report magazine looked at areas with strong economies, low living costs, and plenty of fun things to do to identify this year's best places to live.
The editors reviewed more than 2,000 locations nationwide, considering such factors as sales taxes, housing prices, average number of children per square mile, proximity to healthcare, and the availability of educational institutions. Readers can use a database search to tailor the results to their own situation."Choosing where to live is a difficult decision for any family," says Brian Kelly, editor of U.S. News & World Report. "With U.S. News's Best Places to Live, we've crunched the most important geographic, economic, and educational data and provided the search tools to help make this decision a little easier for families."
The 10 cities honored as Best Places to Live are (listed alphabetically):
Albuquerque, N.M.
Auburn, Ala.
Austin, Texas
Boise, Idaho
Durham, N.C.
La Crosse, Wis.
Loveland, Colo.
San Luis Obispo, Calif.
St. Augustine, Fla.
Upper St. Clair, Pa.
Source: U.S. News & World Report (06/09/2010)
News & World Report magazine looked at areas with strong economies, low living costs, and plenty of fun things to do to identify this year's best places to live.
The editors reviewed more than 2,000 locations nationwide, considering such factors as sales taxes, housing prices, average number of children per square mile, proximity to healthcare, and the availability of educational institutions. Readers can use a database search to tailor the results to their own situation."Choosing where to live is a difficult decision for any family," says Brian Kelly, editor of U.S. News & World Report. "With U.S. News's Best Places to Live, we've crunched the most important geographic, economic, and educational data and provided the search tools to help make this decision a little easier for families."
The 10 cities honored as Best Places to Live are (listed alphabetically):
Albuquerque, N.M.
Auburn, Ala.
Austin, Texas
Boise, Idaho
Durham, N.C.
La Crosse, Wis.
Loveland, Colo.
San Luis Obispo, Calif.
St. Augustine, Fla.
Upper St. Clair, Pa.
Source: U.S. News & World Report (06/09/2010)
Wednesday, June 10, 2009
Update: FHA backs away from no down payment loans
June 2, 2009 1:51 pm
After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts.
Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment. Seems there was plenty of push back that allowing borrowers to land a mortgage without any “skin in the game” was not exactly a great idea. What’s amazing is that the proposal even got floated in the first place; the notion that taxpayer dollars would have been on the line for mortgages that required no down payment was a bit of a head spinner.
What HUD finally settled on was that lenders can essentially advance qualified home buyers the value of their tax credit today to reduce their mortgage costs, but only if the borrower can bring a minimum 3.5% down payment to the table. Approved uses of the tax credit include paying for closing costs, making a larger down payment (to thereby reduce the monthly mortgage cost) or buying down the interest rate by paying points. The real value of the new rule is that eligible homebuyers can now “use” their tax credit today, rather than having to wait to recoup the value of the credit when they file their 2009 federal tax return in early 2010.
Basically, if you meet the eligibility rules you can now get a maximum of $8,000 advanced to you to buy a home. Single homebuyers with income below $75,000 and married couples who file a joint return with income below $150,000 are eligible for the max tax credit. (A limited credit is available for individuals with income between $75,000-$95,000 and joint filers with income between $150,000 and $170,000; the credit completely phases out above those income levels.) Anyone who has not owned a primary residence for three years is considered a first-timer, but to grab the tax credit you must close on an FHA-insured loan before December 1 of this year.
– Carla Fried
After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts.
Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment. Seems there was plenty of push back that allowing borrowers to land a mortgage without any “skin in the game” was not exactly a great idea. What’s amazing is that the proposal even got floated in the first place; the notion that taxpayer dollars would have been on the line for mortgages that required no down payment was a bit of a head spinner.
What HUD finally settled on was that lenders can essentially advance qualified home buyers the value of their tax credit today to reduce their mortgage costs, but only if the borrower can bring a minimum 3.5% down payment to the table. Approved uses of the tax credit include paying for closing costs, making a larger down payment (to thereby reduce the monthly mortgage cost) or buying down the interest rate by paying points. The real value of the new rule is that eligible homebuyers can now “use” their tax credit today, rather than having to wait to recoup the value of the credit when they file their 2009 federal tax return in early 2010.
Basically, if you meet the eligibility rules you can now get a maximum of $8,000 advanced to you to buy a home. Single homebuyers with income below $75,000 and married couples who file a joint return with income below $150,000 are eligible for the max tax credit. (A limited credit is available for individuals with income between $75,000-$95,000 and joint filers with income between $150,000 and $170,000; the credit completely phases out above those income levels.) Anyone who has not owned a primary residence for three years is considered a first-timer, but to grab the tax credit you must close on an FHA-insured loan before December 1 of this year.
– Carla Fried
Monday, June 8, 2009
DASD plans 2.5% property tax hike
Residents living in the Downingtown Area School District will see a tax increase of about 2.5 percent next school year, finance administrators said at a meeting on Tuesday night. The school board approved the preliminary 2009-10 budget in February. At that time, the budget stood at $184 million and included a 3.75 percent property tax increase.
At Tuesday's finance meeting, district officials announced that the budget now stands at $183.9 million and includes a 2.5 percent tax increase. This is the lowest proposed tax increase the district has had in 14 years. A 2.5 percent hike would raise the tax rate to 25.48 mills, with one mill equal to $1 in tax for every $1,000 in assessed property value.
An average taxpayer with a home in the district assessed for tax purposes at $175,000 would therefore generate a school property tax bill of $4,459 — an increase of $109.28 over the prior year. Eligible residents will receive a tax credit of $209 in their school property tax bill from slot revenues.
The school board is expected to vote on next year's budget at its June 10 meeting.
Source: Daily Local; 5/29/09
At Tuesday's finance meeting, district officials announced that the budget now stands at $183.9 million and includes a 2.5 percent tax increase. This is the lowest proposed tax increase the district has had in 14 years. A 2.5 percent hike would raise the tax rate to 25.48 mills, with one mill equal to $1 in tax for every $1,000 in assessed property value.
An average taxpayer with a home in the district assessed for tax purposes at $175,000 would therefore generate a school property tax bill of $4,459 — an increase of $109.28 over the prior year. Eligible residents will receive a tax credit of $209 in their school property tax bill from slot revenues.
The school board is expected to vote on next year's budget at its June 10 meeting.
Source: Daily Local; 5/29/09
West Chester School District hikes taxes 5.9% in Chester County and 9.4% in Delaware County
School taxes for property owners in the Chester County portion of the West Chester Area School District will increase by 5.9 percent next year. For property owners in the district's Delaware County section, school taxes will go up 9.4 percent.
The West Chester Area School Board approved a 2009-2010 final budget on Monday night that calls for $198.7 million in spending. This represents an increase of 3.3 percent over the current year budget, but it comes in the face of a decrease of 6.6 percent in local tax revenue, the district's biggest source of funding, district officials said.
Earlier this year the board approved a preliminary budget that included a 6.6 percent tax increase for Chester County and a 10.1 percent increase for Delaware County. The board's finance committee last week recommended dropping these increases a full percentage point.
The 2009-2010 tax increase is above the limit set by Act 1, but it does not need to go to referendum, officials said, because the district was able to use several Act 1 exemptions.
The district in December 2008 projected a $13.3 million 2009-2010 budget deficit, but due to budget cuts and federal stimulus funding, the gap has been brought down to $6.4 million. The average residential tax bill in the District's Chester County portion will be $3,391, while the average bill in the District's Delaware County portion will be $4,036, officials said. This is based on an average Chester County assessed value of $189,950, and an average Delaware County assessment of $285,000. The millage in the district's Chester County portion will rise 1 mill, to 17.85 mills, while the millage in the district's Delaware County portion will rise 1.22 mills, to 14.16 mills. A mill is a dollar of tax on $1,000 of a property's assessed value.
Source: Daily Times; 5/27/09
The West Chester Area School Board approved a 2009-2010 final budget on Monday night that calls for $198.7 million in spending. This represents an increase of 3.3 percent over the current year budget, but it comes in the face of a decrease of 6.6 percent in local tax revenue, the district's biggest source of funding, district officials said.
Earlier this year the board approved a preliminary budget that included a 6.6 percent tax increase for Chester County and a 10.1 percent increase for Delaware County. The board's finance committee last week recommended dropping these increases a full percentage point.
The 2009-2010 tax increase is above the limit set by Act 1, but it does not need to go to referendum, officials said, because the district was able to use several Act 1 exemptions.
The district in December 2008 projected a $13.3 million 2009-2010 budget deficit, but due to budget cuts and federal stimulus funding, the gap has been brought down to $6.4 million. The average residential tax bill in the District's Chester County portion will be $3,391, while the average bill in the District's Delaware County portion will be $4,036, officials said. This is based on an average Chester County assessed value of $189,950, and an average Delaware County assessment of $285,000. The millage in the district's Chester County portion will rise 1 mill, to 17.85 mills, while the millage in the district's Delaware County portion will rise 1.22 mills, to 14.16 mills. A mill is a dollar of tax on $1,000 of a property's assessed value.
Source: Daily Times; 5/27/09
Pending home sales rise 6.7 percent in April
By ALAN ZIBEL
WASHINGTON (AP) — The number of U.S. homebuyers who agreed to buy a previously occupied home took the largest monthly jump in nearly eight years in April, but there are still plenty of danger signs for the U.S. housing market.
Home sales appear likely to head upward this summer, potentially to levels not seen since the stock market collapsed last autumn, but prices are expected to keep falling well into next year. Layoffs, which are causing foreclosures to soar, coupled with rising mortgage rates could dampen any real estate recovery.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by Obama in February. Since buyers need to complete their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
While economists are encouraged by signs that demand for housing is returning, the outlook is far from sunny. Mortgage rates are rising, making homes less affordable for many borrowers. The average rate for a 30-year, fixed-rate mortgage is around 5.3 percent this week compared with about 5 percent last week, according to Bankrate.com.
Stock indexes advanced modestly in morning trading, but then traded in a tight range around the break-even point. Financial stocks fell after several banks announced plans to raise capital to help repay federal bailout funds.
The health of the U.S. housing market, mired in a three-year slump, is one of the key issues facing the economy. Though sales may be recovering, analysts cautioned that prices will take longer to stabilize because of the glut of unsold properties for sale. Prices are unlikely to rise until foreclosures start declining, and that's unlikely to happen before the end next year.
The national median sales price in April plunged more than 15 percent from year-ago levels to $170,200, driven by sales of inexpensive foreclosures and other distressed low-end properties. That was the second-largest yearly price drop on record, according to the Realtors' group.
Still unknown is the effectiveness of President Barack Obama's $50 billion plan to prevent foreclosures by modifying loans in bulk. Analysts are growing worried that it will not have a substantial impact.
"I haven't seen evidence yet of any significant modifications," said Mark Zandi, chief economist at Moody's Economy.com. "I was hoping that we would see more of a pickup."
The Realtors' index of pending sales contracts was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January. A nearly 33 percent sales increase in the Northeast and a 9.8 percent jump in the Midwest led the overall surge. Sales contracts were flat or up slightly in the South and West.
Still, Yun cautioned that the pending sales data is more volatile than in the past. Many homeowners need to sell their properties for less than the balance they owe on their mortgages — a so-called "short sale" — which requires the lenders' approval. That process is often difficult, time-consuming and can fall apart before the deal closes.
Copyright © 2009 The Associated Press.
WASHINGTON (AP) — The number of U.S. homebuyers who agreed to buy a previously occupied home took the largest monthly jump in nearly eight years in April, but there are still plenty of danger signs for the U.S. housing market.
Home sales appear likely to head upward this summer, potentially to levels not seen since the stock market collapsed last autumn, but prices are expected to keep falling well into next year. Layoffs, which are causing foreclosures to soar, coupled with rising mortgage rates could dampen any real estate recovery.
The National Association of Realtors said Tuesday its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.
The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by Obama in February. Since buyers need to complete their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.
Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future existing home sales.
While economists are encouraged by signs that demand for housing is returning, the outlook is far from sunny. Mortgage rates are rising, making homes less affordable for many borrowers. The average rate for a 30-year, fixed-rate mortgage is around 5.3 percent this week compared with about 5 percent last week, according to Bankrate.com.
Stock indexes advanced modestly in morning trading, but then traded in a tight range around the break-even point. Financial stocks fell after several banks announced plans to raise capital to help repay federal bailout funds.
The health of the U.S. housing market, mired in a three-year slump, is one of the key issues facing the economy. Though sales may be recovering, analysts cautioned that prices will take longer to stabilize because of the glut of unsold properties for sale. Prices are unlikely to rise until foreclosures start declining, and that's unlikely to happen before the end next year.
The national median sales price in April plunged more than 15 percent from year-ago levels to $170,200, driven by sales of inexpensive foreclosures and other distressed low-end properties. That was the second-largest yearly price drop on record, according to the Realtors' group.
Still unknown is the effectiveness of President Barack Obama's $50 billion plan to prevent foreclosures by modifying loans in bulk. Analysts are growing worried that it will not have a substantial impact.
"I haven't seen evidence yet of any significant modifications," said Mark Zandi, chief economist at Moody's Economy.com. "I was hoping that we would see more of a pickup."
The Realtors' index of pending sales contracts was 3.2 percent above last year's levels and has risen for three straight months after hitting a record low in January. A nearly 33 percent sales increase in the Northeast and a 9.8 percent jump in the Midwest led the overall surge. Sales contracts were flat or up slightly in the South and West.
Still, Yun cautioned that the pending sales data is more volatile than in the past. Many homeowners need to sell their properties for less than the balance they owe on their mortgages — a so-called "short sale" — which requires the lenders' approval. That process is often difficult, time-consuming and can fall apart before the deal closes.
Copyright © 2009 The Associated Press.
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