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Exceeding Expectations, Pending Home Sales Rise 5.2%

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Real Estate Broker/Owner with Deaton Group Realty

Exceeding Expectations, Pending Home Sales Rise 5.2% from rismedia.com

RISMEDIA, September 3, 2010-Following a sharp drop in the months immediately after the expiration of the home buyer tax credit, pending home sales have modestly risen, according to the National Association of Realtors.

The Pending Home Sales Index, a forward-looking indicator, rose 5.2% to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1% below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. "Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery," he said. "But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity."

Scott Deaton:  Did you catch what he just stated?  If you purchased a home, lets say anytime during 2003-2007, it may be another 10 years before your value gets back to what you bought it for.  Now you see why the number of foreclosures and shorts sales have gone way up.  If you must sell, then expect a lower price.  Don't expect today's buyer to pay you more for your house than what it is worth....regardless of what you paid for it.  Here in Central Arkansas, I don't think the equity drop was that severe.  We didn't experience a huge increase, so we didn't experience a huge decrease.  Prices have stayed stable throughout Central Arkansas, but there are many options for the buyers.  If you want to sell your home, then price it right.

Yun added, "Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed's very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget."

The PHSI in the Northeast rose 6.3% to 62.5 in July but is 21.1% below a year ago.

In the Midwest the index increased 4.1% to 66.7 but remains 25.7% below July 2009.

Pending home sales in the South rose 1.2% to an index of 86.3, but are 15.6% lower than a year ago.

In the West the index jumped 11.6% to 95.0 but is 17.6% below July 2009.

The national index had fallen 29.9% in May and another 2.8% in June.

For more information, visit www.realtor.org.

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