The most obvious way to predict future home sales would be to take a look at the list of homes that are under contract and waiting for closing.
These are what we refer to as “Pending Home Sales” and we track them on a daily basis in the Tallahassee MLS.
With so many failing to make it past the contract stage, home sellers are anxious, hoping for a real estate closing that may never come.
Pending Home Sales
The graph below shows the one-year trend of pending home sales, so the changes that we see are not due to annual seasonality in any way (every point on the graph contains a full 365 days worth of information).
With the tax credit ending as a stimulant to new pending home sales, this report unfortunately has shown immediate feedback. Beginning with the end of the Homebuyer Tax Credit, home sales have fallen and reached a new low on November 13, 2010.
Since that new low, the market has experienced three upward trends and two downward trends. The current upwards trend is the strongest yet, but lately it looks like it is starting to retreat.
Faster And More Deliberate Solutions Needed
The real question is where will we go from here?
I would think that falling prices and historic lows in interest rates are the primary reasons we have not seen a complete collapse of the market.
As long as we see rates stay down, the falling prices will allow the market to correct itself over time. People who have sold for a huge loss will be able to buy-back into the market at very favorable prices, so we now must turn our attention to creative solutions for “damaged credit” buyers and “no cash” buyers who have just left the market as sellers.
Many sellers are idle because a lender is part of the seller-side approval process. We need faster and more deliberate solutions to deal with distressed properties.
Were we to facilitate and faster process for sellers waiting for closing, the market recovery could (and would) occur so much faster.
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