Minden Press-Herald

Tuesday
Sep 30th

Contracts to buy US homes up sharply in May

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WASHINGTON — The number of Americans who signed contracts to buy homes shot up in May. But the pace of buying this year remains slower than in 2013, in part because of sluggish sales during winter.

But just because contracts are being signed doesn't mean that they are being closed, at least in Minden anyway.

"Our listings are being shown like crazy, contracts are being signed like crazy," Amy Mealey of Carey Real Estate said. "People are looking and making a good effort to buy."

But contingencies are a hold up — contingency upon selling another home, contingency upon lenders, contingency upon jobs.

Buyers who would have been approved for loans a couple of years ago are not always being approved now, Mealey said.

"They're making an effort, but what may be a little glitch that wouldn't have made a difference before is making a difference now," she said.

The types of loans being approved may also be reason for homes appearing to be on the market longer than usual.

Rural development loans, which are prevalent in Webster Parish, and veterans' affairs loans generally take more than the usual 45 days from contract signing to closing.

Another factor is the changing in home values, largely due to the drop in natural gas production in north Louisiana.

"Comps (comparable homes) going back six months are a big difference from comps going back 24 months," Mealey said. "List prices may not be going down but comps and appraisals are."

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index rose 6.1 percent to 103.9 last month. It was the sharpest month-over-month gain since April 2010. The index remains 5.2 percent below its level a year ago.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Lower mortgage rates and increased supplies of homes on the market drove much of last month's gains. Signed contracts rose in all four U.S. regions: the Northeast, Midwest, South and West.

The housing market is finally showing signs of momentum, though overall buying remains slower than last year.

"The sector continues to put the horrid (winter) weather behind it and is moving on," said Jennifer Lee, senior economist at BMO Capital Markets. "It certainly helps that confidence is higher, borrowing costs are slipped from the start of the year and it is reportedly becoming less strenuous to obtain a mortgage."

In a separate report last week, the Realtors said completed sales of existing homes rose 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million homes. Still, sales are down 5 percent year-over-year.

The Realtors forecast that sales of existing homes will decline 2.8 percent this year to 4.95 million, compared with 5.1 million in 2013.

Sales of new homes jumped 18.6 percent last month to an annual rate of 504,000, the highest level since May 2008, the government said last week.

 

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