Summertime....Will the Home Buying be Easy?
By Lawrence Yun, Chief Economist, NAR Research
It was a good kick-off for the summer season. The pending home sales index figure that was released earlier this month marked a third straight month of rising pending sales.
That is certainly welcome and encouraging news. It is fairly obvious that first-time buyers are responding to the incentives of rock-bottom mortgage rates and the first-time buyer tax credit to pick up relatively cheaply priced homes.
Indeed, recent figures suggest about 45 percent of buyers have been first-timers – a higher proportion than the typical 35 to 40 percent during more normal years.
A high proportion of the transacted homes are distressed, either in foreclosure or requiring a lender approval short-sale, with deep discounted prices. By the fourth quarter, existing-home sales are projected to be about 15 percent higher compared to the comparable period the year before if all goes as planned.
Some of the recent first-time buyer transactions will help existing homeowners to make the sale and then buy the next home. Other first-time buyers purchasing vacant home still are helping in terms of absorbing inventory.
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