Good news from the housing market got the week off to a good start Monday when the National Association of Realtors reported that pending home sales rose unexpectedly by 3.2% in March. This jump in pending sales also made the annual number positive. Home prices were strongest in the Western and Southern parts of the country. There are three factors being credited with home sales starting to pick up: falling prices, low interest rates, and tax credits.

Falling Prices: Home prices have been falling steadily across the country over the past couple of years. As prices fall, eventually the potential buyers on the sidelines have to pay attention. If you live in a market where prices are down sharply, such as Nevada, Arizona, California, and Florida, you have an opportunity to buy homes today at prices that are sharply lower than just a couple of years ago. Sellers who are desperate are willing to negotiate just to get themselves out of their monthly mortgage payments. Home buyers who have been patient through this downturn are beginning to be rewarded for that patience.

Low Interest Rates: You can’t really turn on the radio anymore without being barraged with mortgage lenders trying to talk to homeowners and potential home buyers about historically low rates. Anytime you have an opportunity to lock in a 30 year fixed-rate mortgage at 5% or even lower, buying activity is going to pick up. Getting approved for a loan at that rate can be a challenge, but if you qualify, the cost of financing a home purchase right now is about as low as it’s ever been.

Tax Credits: Part of the Obama Stimulus package was an $8000 credit for first time homebuyers. The fact that you can write off mortgage interest on your taxes makes home ownership attractive from a tax standpoint, but an $8000 credit for those willing to buy a home between now and December 1^st is a great added benefit that motivating potential buyers who might be sitting on the fence to act.

It will be several months before we can say whether or not this is the beginning of a sustainable turnaround, but it’s sure nice to see some good news for a change from the housing market!

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Tags: Home Sales, Housing, Housing Prices, Interest, mortgage

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