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.
The Case-Shiller Index, meanwhile, recently found that home prices fell in February 2012, but at a lower rate than a year earlier. Indexes that purport to provide a much more current gauge of home prices say that prices are actually rising.
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.
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