Housing Market Has Historic Rebound

By Gardner Realtors | July 7, 2020

Pending home sales increased nationally by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. The numbers are even better here locally. Since April in the Metro New Orleans area, pending home sales have risen a whopping 85.28%! So, what exactly are pending home sales, and why is this rebound so important?

 

According to NAR, the Pending Home Sales Index (PHS) is:

“A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.”

 

In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes.

 

Why is this rebound important?

With the COVID-19 pandemic and a shutdown of the economy, there was an expected decline in the number of properties that went under contract. Beginning in April, however, that number increased dramatically here locally in the Metro New Orleans area (see graph below):

 

Metro New Orelans Pending Sales 2019-20

 

This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:

“This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery.”

 

But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:

“More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

 

As we move through the year, we’ll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. During the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers. The lack of overall inventory, however, is creating an opportunity for homeowners who are ready to sell.

 

Bottom Line

If you decided not to sell this spring due to the COVID-19 health crisis, maybe it’s time to jump back into the market while buyers are actively looking for homes. Connect with your trusted local real estate advisor at GARDNER, REALTORS today to determine your best move forward.

 

Thank you to Keeping Current Matters for providing this content.

 


 

blog-footer copy

Tagged under: , , , , ,

Related Articles

@neworleanslifestyles