Supporting the view that the housing market is on a positive trajectory, a new report shows that the number of homes that are in the process of being sold is at its highest in two years. Meanwhile, the number of home sales that closed reached its best first quarter in 2012 since the dawn of the housing crisis, a National Association of Realtors economist says.
The NAR's Pending Home Sales Index which measures home-purchase contract signings and predicts home sale closings, ticked up 4.1 percent to 101.4 in March 2012 from an upwardly revised 97.4 in February 2012. That's also 12.8 percent above the March 2011 level. That index, compiled by the Realtors group, puts pending sales at the highest they've been since April 2010, and its encouraging measurement drove up the U.S. stock market Thursday, Bloomberg said.
National Association of Realtors Chief Economist Lawrence Yun said in a statement that 2012 has seen the best-performing first quarter in five years for home sale closings, and that the Pending Home Sales Index -- since it measures contract signings, which come before contract closings -- predicts an equally improved second quarter.
"The housing market has clearly turned the corner," Yun said. "Rising sales are bringing down inventory and creating much more balanced conditions around the country, which means home prices will be rising in more areas as the year progresses."
If Yun is right, that means a five-year downward spiral fueled by fast-and-loose lending and the price-crushing foreclosures that followed has finally come to end, leaving a humbled housing market in its wake. Around 4 million people lost their homes to foreclosure during the crisis, a number that experts say will rise by millions more, while home prices plunged by more than a third. As a result, at least 1 in 5 homeowners owe more on their mortgages than their homes are worth.
The positive pending home sales report follows other data that has offered mixed signals about the condition of the housing market. A recent Census Bureau statistic reported that new home sales fell in March 2012, but also showed that, contrary to what the Census Bureau previously reported, new home sales actually rose significantly in February 2012.
While most economists agree that the housing market is making at least some headway, they often do not paint as rosy a picture as the National Association of Realtors, which calculates the Pending Home Sales Index.
Among their concerns is the looming threat of the "shadow inventory": the overhang of homes in a state of foreclosure that are expected to eventually be repossessed by banks, or homes already repossessed by banks that are being held off the market.
Due to the recent robo-signing settlement between major lenders and 49 state attorneys general, a share of these homes, economists say, may flood the market in the coming months, driving down home prices.
America's Most and Least Affordable Cities to Buy a Home
Home Sales See Best 1st Quarter in 5 Years, Realtors Report Says
5. Jersey City, N.J.
Price per sq. ft.: $299.90
Median list price: $299,900 (22nd highest)
Median sq. ft.: 1,000 (the lowest)
Search rank (out of 146): 119th
Cost per square foot in the Jersey City area is the fifth-highest in the country. The reason for this is that while median list price is just shy of $300,000, the average size of listed properties is only 1,000 square feet -- the
lowest among the largest housing markets examined. Demand for homes and apartments in the city has been extremely limited. The region's Realtor.com search rank is 119, which is the 28th lowest among the 146 markets examined.
4. San Jose, Calif.
Price per sq. ft.: $315.96
Median list price: $468,888 (3rd highest)
Median sq. ft.: 1,484 (12th lowest)
Search rank (out of 146): 60th
San Jose's unemployment rate in January 2011 was 10.8 percent. By January of 2012, the unemployment rate had dropped to 9.1 percent. While unemployment in San Jose is still above the national average, the improvement was one of the biggest among the country's major housing markets. That recovery in the region's economy is reflected in housing demand and prices. Median list prices in the past 12 recorded months jumped by 7.9 percent. Between January and February alone, those prices increased by 4.2 percent, the largest growth in the country during that time.
3. Washington, D.C.
Price per sq. ft.: $372.11
Median list price: $384,950 (9th highest)
Median sq. ft.: 1,034.5 (3rd lowest)
Search rank (out of 146): 86th
Washington, D.C., has had a major period of housing price growth in the past year. The median value of listed properties in the capital region increased by 4.17 percent between January and February alone, the second-largest increase in the country. Over the past 12 months, prices have gone up by an astounding 18.45 percent. During the recession, the region lost only a small percentage of its jobs and is projected to recover nearly three-quarters of the lost positions by the end of this year.
Price per sq. ft.: $381.03
Median list price: $450,000 (4th highest)
Median sq. ft.: 1,181 (4th lowest)
Search rank (out of 146): 120th
The unemployment rate in Honolulu, Hawaii, is just 5.7 percent, which is well below nearly every other major housingmarket in the U.S. The Hawaiian capital has a median list price of $450,000, the fourth highest in the country. Median list prices have increased by 7.14 percent over the past 12 recorded months and have been flat in the past month. The number of homes available on the market has fallen sharply, which has helped keep prices high. Between February 2011 and February 2012, the total number of listed properties fell by 13.8 percent.
Price per sq. ft.: $420.99
Median list price: $611,700 (the highest)
Median sq. ft.: 1,453 (9th lowest)
Search rank (out of 146): 45th
Of the 146 housing markets examined by Realtor.com, there are none as competitive -- or expensive -- as San Francisco's. Median price of listed properties in the area is an astounding $611,700, which is more than $100,000 greater than the next-most expensive region, Santa Barbara. Median list price was up by 3.77 percent between January and February, the fifth-largest increase in the U.S. While San Francisco's housing market is only the 92nd largest, it was the 45th most popular realestate search in February.
5. Wichita, Kan.
Price per sq. ft.: $69.04
Median list price: $129,900 (11th lowest)
Median sq. ft.: 1,882 (29th highest)
Search rank (out of 146): 96th
The median square footage of a listed Wichita property is 1,882, the 29th largest in the country. The median list price, however, is just $129,900, the 11th-lowest price in the U.S. During the recession, home values dropped just 2 percent, one of the smallest declines in the country. The unemployment rate in the region is 7.7 percent, well below the national average. Nevertheless, property remains extremely cheap in the region. There has been some interest in Wichita real estate. It ranks in the middle of Realtor.com's measure of the most searched-for real estate markets, and home prices climbed by more than 3 percent between February 2011 and February 2012.
4. Indianapolis, Ind.
Price per sq. ft.: $68.56
Median list price: $133,000 (13th lowest)
Median sq. ft.: 1,940 (21st highest)
Search rank (out of 146): 55th
Properties in the Indianapolis metropolitan region are among the largest in the country at a median 1,940 square feet. However, the median listing price in the area, according to Realtor.com, is just $133,000, the 13th lowest in the U.S. These low costs, along with better-than-average unemployment, have led to some increased interest in the city's real estate. Median list prices climbed 6.4 percent in the past recorded year, and inventory fell by more than 18 percent over the same period.
3. Toledo, Ohio
Price per sq. ft.: $67.02
Median list price: $100,000 (3rd lowest)
Median sq. ft.: 1,488 (13th lowest)
Search rank (out of 146): 117th
Like Dayton, Toledo was once one of America's largest industrial centers and has fallen on hard times in the past several decades. Poverty and unemployment are both extremely high in the region. Median income is the 14th lowest among the cities on our list. Median property listings are just $100,000 in the region, according to Realtor.com. This is the third-lowest price in the country, amounting to $67.02 per square foot. Nevertheless, there has not been much interest in Toledo property, as it ranks 117th out of 146 on Realtor.com's most-searched-for list. Median list prices fell by 4.31 percent between January and February of this year, the second-biggest decline among the regions examined.
2. Fort Wayne, Ind.
Price per sq. ft.: $66.03
Median list price: $104,900 (4th lowest)
Median sq. ft.: 1,580 (24th lowest)
Search rank (out of 146): 76th
Property costs, according to Realtor.com, are the second-lowest in the country in Fort Wayne at $66.03 per square foot. Prices, however, have begun to recover in the region. Between February 2011 and February 2012, the median list price increased by more than 5 percent. However, in the past recorded month, propertyvalues fell by 2.78 percent, the fourth-worst decline in the country among the 146 regions studied.
Price per sq. ft.: $62.45
Median list price: $84,900 (the lowest)
Median sq. ft.: 1,360 (5th lowest)
Search rank (out of 146): 2nd
Detroit was one of the hardest-hit cities by the recession. The city already had been undergoing several decades of severe economic drought. Home prices still fell by 54.9 percent from their pre-recession peak. The city's unemployment rate has declined in the past year, but it remains in the double-digit range and is still one of the worst among major U.S. cities. Apparently, however, speculators see a silver lining in the Motor City, or at the very least, a bottom in the housingmarket. In February, only one city (Chicago) among the 146 measured by Realtor.com, had more searches for property than Detroit. This may have something to do with the fact that the median list price in the region was just $84,900 in February, or $13,600 less than the next-highest city.